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December 11, 2012 8:27 AM Psst, Wanna Buy a Disability-Free Year of Life?

By Austin Frakt

Health is priceless, but that doesn’t stop economists from pricing it. Cutler, Rosen, and Vijan tell us that, on average, an additional year of life for a 65 year old in the US costs $145,000 in medical care. And that’s for the 1990-2000 decade, so it’s probably higher today.

But health spending produces more than life extension, it also increases the quality of life. In other words, a lot of those $145,000 dollars that Cutler and colleagues said were expended per additional life-year didn’t actually increase longevity. But they may have increased health. Liming Cai estimates that for Medicare beneficiaries 65 years old or older, an additional disability-free life-year costs just $75,000 in health care, or almost half that for an additional life-year. (His estimate is for the 1992-2005 period.)

Of course citizens of other countries get their disability-free life-years cheaper. Still, the US price may be worth it, considering the benefits. Is it? Factor in that, here in the US, you also get access to this.

[Cross-posted at The Incidental Economist]

Austin Frakt is a health economist and an assistant professor at Boston University's School of Medicine and School of Public Health. He blogs at The Incidental Economist.
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