Categories:
Economics of Health Care
In this essay, I write
If you obtain a colonoscopy every five years, starting at age 50, then between age 50 and age 75 you will have 6 colonoscopies. Dr. Arai, quoted above, gives a range of $500 to $1000 for the cost of a colonoscopy. If the cost is at the upper end of the range, then the cost of $6000 exceeds the benefits, which we calculated as $5400.
However, with some degree of risk aversion, from an individual standpoint the procedure makes sense. Later, I write,
I personally think that routine colonoscopy is worthwhile, and I can sympathize with others who agree. However, it may appear otherwise to those who are fixated on the trade-off between aggregate longevity and cost.
READER COMMENTS
spencer
May 23 2005 at 8:22am
If you take your argument to its logical extreme of paying for the exam out of pocket you are saying it is worthwhile to a higher income individual but not worth it to a lower income individual. Moreover, the dividing line of where it is worthwhile depends on if you are using pretax or after tax income– an important consideration when so much of current medical costs are paid out of pretax income.
Is that the outcome you want?
Jim Erlandson
May 23 2005 at 8:31am
Colonoscopy: $500
Economist’s calculated value of routine colonoscopy: $5,400
Peace of mind from knowing you are cancer-free: Priceless.
For everything else there is Medicare.
james gaulte
May 23 2005 at 8:44am
Doesn’t the bottom line depend on the value choosen for the value of a lifeyear?You rejected Culter’s 100,000 and use 30,000 instead.Why not some other number? Isn’t the real bottom line what a person decides it is worth to him?It may be worth a great deal to get a negative colonoscopy to a person whose twin brother had colon cancer and much less to some one who wife makes him do it because she thinks it is a good idea.
Michael H.
May 23 2005 at 10:03am
Hi Arnold
I read your Tech Central Station article and the main objection I would have is your decision to reduce the benefit of a extra life-year from $100K to $30K. Luckily, we Americans rarely have to pay for extra life years so we can afford to pay a lot for one if we need to. As you said in your article, people are risk averse, so it is perfectly rational to pay well in excess of our salaries for a small increase in our expected life-span.
My father had a colonoscopy done at age 70 (he should have done it sooner). It detected cancer and he was operated on and received chemo for a year. He survived! He’s still living after 12 years and will probably live another 12, (hopefully more). I’m only 42 but I just had one. When you have a family history, the odds go up.
Btw, I think mine cost over $1000, and my insurance paid for 90%. Obviously, my incentives for shopping around for a deal are pretty non-existant.
Boonton
May 23 2005 at 10:15am
Why does it cost $1000? Is that the price you pay if you’re paying for it OOP? Since many are paid for with insurance how do you know that the $1,000 price does not include an indirect subsidy for the insurance companies? Are there economies of scale involved? Does it cost $1,000 because the office where it is done only does 3 per month meaning that fixed costs are being divided over a small base? If an office did 60-100 per month could the cost come down to $250????
Ben England
May 23 2005 at 1:54pm
A couple of points:
1. cost of colonoscopies (not flex sig) probably closer to 1000$ I checked with our billing department, and this is a good average between Medicare and commercial payment. Roughly half is professional and half is facility fee.
2. The test can be repeated after 10 years for a normal, and you’d be hard pressed to find anyone who’s had more than 3 screening colonoscopies in real life.
The benefit/cost ratio would definitely drop off significantly after 3 normal exams, and likely so after the first 1 or 2. Given that, I think that 3000$ is a better figure and certainly stacks up well agaist the 5400$ conservative estimate.
In the higher risk population (cancer and adenomatous polyps), things change, I’ll have to look up some numbers.
Bob Knaus
May 24 2005 at 7:19am
Kirk Kerkorian is what, 87? He should have a colonoscopy every year, if he wants one. Think of the tremendous shareholder value that even a few more months of life for this guy would create.
I, on the other hand, am 43 and live on a sailboat in the Bahamas and pay all my own health expenses. I gross about $25K a year, teaching boy scouts how to sail. I don’t need a colonoscopy now, and I doubt I’ll want one in 10 years, or 20. I can better spend that money on fixing my mainsail.
I know that I wouldn’t be happy doing corporate takeovers. I could be wrong, but I’ll betcha Mr. Kerkorian wouldn’t be happy showing kids the wonders of snorkeling. Or picking up seashells.
None of this seems unfair to me at all. Our lives do have different monetary value. So what?
Capt. Bob Knaus
S/V PELLUCID
http://www.pellucid.org
Lawrance George Lux
May 24 2005 at 12:19pm
A Colonoscopy lacks real medical security, as tumorous growths can develop into full malignacy within three months. The Protection bridge, therefore, lacks numerous Spans.
There is also Patient animoisity to them. I have had three, and vowed never again. lgl
Robert Schwartz
May 25 2005 at 11:28pm
I can still taste the stuff they made me drink the last time, (~18 months ago). Not fun.
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