NRL News

Provocative New Study Finds Higher US Cancer Spending Saves Lives, Improves Economy

by | Apr 19, 2012

By Jennifer Popik, JD, Robert Powell Center for Medical Ethics

The argument is commonly made that other countries around the world have more efficient health care systems than the U.S., meaning they spend less money for supposedly better outcomes.  In a recently published Health Affairs study titled “Higher Spending in the US Versus Europe: Is It Worth It?,” the authors compared spending with cancer survival rates between the U.S. and Europe and came to quite contrary conclusions.  Not only does higher spending on most major cancers lead to U.S. patients gaining years of life, but this life-saving spending has a tremendous positive impact on the economy. []

Tomas Philipson and his coauthors found, “For cancer patients diagnosed during 1995–99, adjusted average survival was 11.1 years from diagnosis in the United States, compared with 9.3 years from diagnosis among the European countries—a difference of 1.8 years.”   1.8 years of life certainly would be an accomplishment in its own right, and of tremendous value to patients. However  the authors went one step further. 

The study asked, “Is It Worth It?”  While gaining 1.8 years might been seen as the right thing to do, many would argue that the millions of dollars spent gaining those almost 2 years was too costly.  However, what the authors looked at was the pure economic value of the time gained.  They actually calculated the earning potential and economic value of the life years saved, and subtracted the cost of the cancer care and found there was a tremendous net value gain.

“For an individual cancer patient, the net value of survival gain was $61,000 on average, ranging between $51,000 and $94,000 over the seventeen-year analysis period. The net value to all US patients with the cancer types included in the analysis was $598 billion or approximately $43 billion annually.  To put the aggregate net value to US patients into context, in 1999, $598 billion corresponded to approximately 36 percent of US health care spending in 2010 dollars.”

Despite this study, and others like it, critics of U.S. healthcare point to high per capita spending on preserving life and promoting health, lamenting that we are not getting value for our money. While this study goes a long way to dispelling that myth as it relates to cancer survival, what about other metrics commonly used to measure healthcare?  A closer examination reveals that those in the U.S are in fact getting more for our money, living longer, surviving major diseases at a higher rate, having choice of providers, and receiving timely care.

This conclusion would seem to be in conflict with a frequently cited World Health Organization (WHO) statistic that ranks the United States as having only the 37th best health care system, despite spending more than any other nation. What may come as a surprise is how the WHO actually reaches this conclusion, and how certain factors are calculated.

Some of these measurements are of perceived “fairness,” the extent to which the population smokes, the income tax system (progressivity is valued in this calculation), whether or not the government runs health care, and if a nation allows Health Savings Accounts (the WHO ranks this negatively). It is worth highlighting, however, that when rating countries in terms of life-saving and health-preserving outcomes, the WHO ranked the U.S. number one. Michael Tanner of the Cato Institute points out the WHO’s contradiction: despite the seemingly low overall ranking U.S, the U.S. ranks FIRST in “responsiveness to patients’ needs in choice of provider, dignity, autonomy, timely care, and confidentiality.” 

Another factor used in the WHO ranking is life-expectancy. At first-glance, this metric shows the U.S. having the lowest life-expectancy among several first world nations. However, life expectancy is not dependent exclusively on health care. If one adjusts for two simple factors, deaths from homicide and transportation accidents, which are disproportionately high in this nation, the U.S. actually rises to the top. Deaths in the U.S. from homicide are much higher than other nations.  Documentation for this analysis  can be found here:

In short, contrary to the conventional wisdom embodied in the Obama Health Care Rationing Law (see , the common sense answer turns out to be the right one – America’s devoting more resources than other countries to health care pays off in lives saved.

[On the distinct but related question of whether Americans can afford ongoing increases in such life-saving spending, visit ]

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Categories: Health Care