[Ip-health] Lichtenburg study on medical innovation and life expectancy; comparison of US states' life expectancy and their Medicare/Medicaid policies

[Mike Palmedo]

Link to the summary below, as well as to the full report:
http://www.manhattan-institute.org/html/mpr_04.htm

Why Has Longevity Increased More in Some States than in Others? The Role
of Medical Innovation and Other Factors

Medical Progress Report
No. 4 July 2007

Frank R. Lichtenberg
Columbia University and National Bureau of Economic Research

Executive Summary

It is no surprise that Americans are living longer today than in
previous generations. A typical baby born in 1900 was expected to live
to about age 45. Today, life expectancy at birth is about 78. Less well
known, however, is the fact that the gains in life expectancy have not
been uniform across the country. In his new study=97the first of its
kind=97Columbia University researcher Frank Lichtenberg set out to find
out which states are the leaders, which ones are the laggards, and why.

Lichtenberg began by constructing life-expectancy estimates of residents
in all fifty states using data from the National Center for Health
Statistics. He found that in 2004, on average, residents of Hawaii (81.3
years) and Minnesota (80.3 years) lived six or seven years longer than
residents of Mississippi and Louisiana (74.2 years).

In addition, he found that while nationwide life expectancy increased by
2.33 years from 1991 to 2004, the increase varied greatly among the
states. Certain states=97New York (4.3 years), California (3.4 years), and
New Jersey (3.3 years)=97led the way, while others=96Oklahoma (0.3 years),
Tennessee (0.8 years), and Utah (0.9 years) trailed the national average
by significant margins.

Lichtenberg then set out to examine why this "longevity increase gap"
exists by measuring the impact of several factors that researchers agree
could affect life expectancy. He found that, although some obvious
suspects=97obesity, smoking, and the incidence of HIV/AIDS=97played a role,
the most important factor was =93medical innovation.=94

Specifically, Lichtenberg found that longevity increased the most in
those states where access to newer drugs=97measured by mean =93vintage=94 (=
FDA
approval year)=97in Medicaid and Medicare programs has increased the most.
In fact, about two-thirds of the potential increase in longevity=97the
longevity increase that would have occurred if obesity, income, and
other factors had not changed=97is attributable to the use of newer drugs.
According to his calculations, for every year increase in drug vintage
there is about a two-month gain in life expectancy. These represent
important findings given the fact that the costs of prescription drugs
continue to receive a great deal of attention in the ongoing debate over
health-care policy, while their benefits are often overlooked.

Lichtenberg also estimated impacts on productivity and per-capita
medical expenditure. He concluded that states adopting medical
innovations more rapidly had faster labor productivity growth,
conditional on income growth and other factors, perhaps due to reduced
absenteeism from chronic medical ailments. He also found that states
that use newer drugs did not experience above-average increases in
overall medical expenditure, which contradicts the common perception
that advances in medical technology inevitably result in increased
health-care spending.

There are two ways to improve the average quality of U.S. health care.
One way is to give best-practice care to people who are currently
receiving less than best-practice care (e.g., to ensure that all
heart-attack patients take beta blockers after they are released from
the hospital). The other way is to improve best-practice care by
shifting the technological frontier (e.g., to develop new ways to
monitor, treat, and even prevent heart disease). This study indicates
that the development and use of new medical goods and services, which
shift the technological frontier, have been responsible for many recent
gains in the health and longevity of Americans.

SUMMARY OF FINDINGS

Variation in Life Expectancy Gains

=95 From 1991 to 2004, nationwide, life expectancy at birth increased 2.33
years; life expectancy at age 65 increased by 1.29 years.

=95 The states with the largest increases in life expectancy were the
District of Columbia (5.7 years), New York (4.3 years), California (3.4
years), New Jersey (3.3 years), and Illinois (3.0 years).

=95 The states with the smallest increases in life expectancy were
Oklahoma (0.3 years), Tennessee (0.8 years), Utah (0.9 years), Alabama
(1.0 years), and West Virginia (1.0 years).

=95 In the eight states with the smallest increases, life expectancy
increased by 0.31=961.16 years. In the eight states with the largest
increases, life expectancy increased by 2.60=964.33 years.

Factors Affecting Life Expectancy

=95 Growth in obesity and, interestingly, growth in income were both
inversely related to (and presumably reduced) the growth in life expectancy=
.

=95 If obesity and income had not increased, life expectancy at birth
would have increased by 3.88 years from 1991 to 2004, instead of the
actual 2.33-year increase. Thus, 3.88 years is the =93potential increase
in life expectancy at birth.=94

=95 Of the 3.88-year potential increase in life expectancy at birth,
medical innovation (i.e., the increase in Medicaid and Medicare drug
vintage) accounted for 2.43 years (63%). The declines in AIDS incidence
and smoking accounted for 0.23 and 0.12 years (6% and 3%), respectively.
About 1.1 years (28%) of the potential increase in life expectancy at
birth is unexplained.

=95 If obesity and income had not increased, life expectancy at age 65
would have increased by 2.15 years from 1991 to 2004, instead of the
actual 1.29-year increase. Thus, 2.15 years is the =93potential increase
in life expectancy at age 65.=94

=95 Of the 2.15-year potential increase in life expectancy at age 65,
medical innovation (i.e., the increase in Medicaid and Medicare drug
vintage) accounted for 1.19 years (55%). The declines in AIDS incidence
and smoking accounted for 0.07 and 0.12 years (3% and 5%), respectively.
About 0.8 years (36%) of the potential increase in life expectancy at
age 65 is unexplained.

Medical Expenditure Impact

=95 Increases in income, education, smoking, and the incidence of AIDS
tend to increase per-capita medical expenditure; expanded health
coverage reduces it.

=95 States that had the greatest increase in drug vintage did not
experience above-average increases in overall medical expenditure. While
use of newer drugs has increased some types of medical expenditure, it
has reduced other types, and the expenditure reductions approximately
offset the expenditure increases.

=95 Although use of newer drugs does not appear to have increased annual
medical expenditure, it probably has increased lifetime medical
expenditure slightly as the use of newer drugs increased life expectancy
at birth by 2.43 years. But the implied cost per life-year gained is
quite low.

Productivity Impact

=95 States with larger increases in Medicaid drug vintage had faster
productivity growth, conditional on income growth and other factors.

=95 The increase in Medicaid drug vintage is estimated to have increased
output per employee by about 1% per year. Much of this may be
attributable to increased hours worked per employee.

--
Mike Palmedo
Research Coordinator
Program on Information Justice and Intellectual Property
American University, Washington College of Law
4910 Massachutsetts Ave., NW Washington, DC 20016
T - 202-274-4442 | F 202-274-0659
mpalmedo@wcl.american.edu