Higher health care costs pay off in longer lives

Sen. Ben Nelson's plan to allow small businesses to form pools to lower health insurance premiums is still in doubt, but news this week proves the issue remains worthy of special attention.

As the "Association Health Plan Bill" was being rewritten to make it more palatable to Nelson's fellow Democrats, word has come that health insurance premiums paid by employers grew 7.7 percent last year, down from a 9.2 percent increase a year before, but more than twice the rate of inflation.

According to the Kaiser Family Foundation report, premiums have almost doubled in price since 2000, up 87 percent at the same time wages went up about 20 percent.

That change has had a predictable effect; with only 61 percent of companies offering health insurance now compared to 69 percent in 2000.

Workers pay an average of $2,973 a year toward family coverage and $627 for individuals, but if they think that's bad, they should realize that the same coverage costs the company an average of $11,480 for families and $4,242 for individuals.

But that's on average. For small businesses, employees pay $3,550 a year on average for family coverage.

That's a lot of money, but is it worth it?

Well, according to a study published earlier this month by the New England Journal of Medicine, the money we're pouring into health care is a bargain when you consider the increase in life expectancies.

And, most of that benefit is going to younger workers, who are bearing the brunt of the expense.

Comparing health care costs and life expectancy for various age groups in each decade since 1960, Harvard health economist David Cutler and colleagues found that U.S. residents born in 1960 have an average life expectancy of 70 years, increasing to 77 for those born in 2000.

About 3.5 years of that increase can be attributed to health care improvements, with 70 percent of that credited to better treatments for heart attack and other cardiovascular disease, and another 19 percent to improved care for newborns.

After adjustment for inflation, each year of increased life expectancy costs about $19,900. That, however, increased life expectancy from $7,400 in the 1970s to $36,300 in the 1990s.

"On net, it's actually been a very good deal," researcher Cutler said. "It's very clear that we don't need to spend every penny we do spend. What's also clear is that there's a lot of stuff that is worth it."

But the extra years are costly for older people; between 1960 and 2000, each extra year of life costs seniors about $84,700 compared to $13,300 for newborns, $31,600 for 15-year-olds and $53,700 for 45-year-olds, according to the study. And, the cost for an additional year of life for seniors increased from about $121,000 between 1980 and 1990, to about $145,000 between 1990 and 2000.

Clearly, we all can't have every new treatment available for every malady. But ways must be found to provide basic health care for most people at a cost we can afford.