Economic Impact of Preventive Medicine

In fiscal year 1974, national expenditures for health care reached 104 billion dollars of 7.7 percent of Gross National Product. With such a substantial share of resources going to health care, there is widespread concern over the wisdom of the total and its allocation. The allocation is the theme of this conference and the question is whether the overwhelming proportion of health expenditures should continue to be directed to the care and maintenance of the sick or should more resources be directed to prevention. Does "preventive medical care" use less scarce resources'! Does it lead to better health status? Is it cheaper?

The medical care system is fashioned to respond to an individual Who perceives himself to need consultation. Blue Cross, Blue Shield, Medicare, and Medicaid were developed for the purpose of mitigating the cost of that consultation and its sequelae. There is unanimous agreement that third -party coverage will increase, and virtual unanimity that government will take the leading role by introducing some sort of national health insurance plan by the end of the decade. The managers of existing plans together with the framers of new plans will have to make judgments about what kind of medical care to finance, to promote or even, perhaps, to require or proscribe.

It is the purpose of this report to describe some of the available tools for policy analysis that would allow one to examine more systematically the implications of devoting more resources to prevention. We begin by discussing alternative routes to prevention. We then go on to describe these methods; the focus is on cost effectiveness analysis and cost benefit analysis. Next, we review briefly some of the literature on preventive health care with emphasis on what we can learn about the economic impact of that care. Finally, we offer some recommendations both for future research and for public policy.