Wednesday, February 25, 2009

More on the President’s Speech to the Joint Session of Congress

In his speech on Tuesday evening, the President called for “the largest investment ever in preventive care.” What would be the short-term and long-term economic results of such an investment?

First, we will almost certainly spend more money in the short run. Is the President trying to avoid this fact? I honestly do not think so. He chose to refer to the new spending as an investment in preventive care. Investments have a couple important characteristics that we need to remember. First, a return on investment can be a long time coming. Second, investments are often uncertain; the return on investment may be higher or lower than we expect. The stock market shows that. Even if the average return is seven percent per year, some years the return is higher and other years it is lower. The same is true for prevention. It is not always equally effective in all groups. Within a group, some people may still get the condition that is being prevented.

Second, we may still spend more money in the long run. I have noted previously that prevention doesn’t always save money. Spending more will not make the expenditure any more likely to save money overall.

The key question to ask when assessing whether “the largest investment ever in preventive care” is worthwhile is whether the gains in health that are almost certain to occur are worth the extra spending that is going to occur. “The largest investment ever in preventive care” should lead to the largest improvement ever (or at least nearly the largest improvement in recent times) in the public’s health.

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