LR: That’s a choice people can make. But they might want to think about it a little differently. If you think about how many years of good health you can buy for a million dollars, studies show that some interventions buy a lot, others very few. For example, flu shots for the elderly buy a lot of years of good health, but annual Pap smears—as opposed to screening less often—buy very few. The comparison suggests that it’s important to make sure that we do the most effective things first, like the flu shots.

TL: But what about the studies that claim there are savings?

LR: Some studies claim savings but they are usually not just looking at medical costs and savings. You will see studies claiming that a preventive intervention saves five dollars for every one dollar spent. What they are doing is valuing every life saved at the future earnings of the person and including those dollars along with medical costs and savings.

TL: Is that valid?

LR: Not if the point at issue is whether prevention will reduce medical spending.

TL: Does self-management of a disease save money? It’s been promoted as a way to cut costs.

LR: Probably not. And I think it’s important to remember that some things that might reduce medical spending do so by increasing costs outside the medical sector, so they are a kind of cost shifting. This is often true of self-management, which can require considerable time, effort, and cost on the part of the patient, and the patient’s family and friends.

TL: Are people being misled about preventive care ?

LR: It’s so easy for people to misunderstand the issue. I hesitate to think that people who say preventive care saves money are deliberately misleading. I think most of them don’t understand it.

TL: What is cost effectiveness analysis?

LR: It projects the costs and health outcomes from different medical choices. It’s a way of comparing costs and health outcomes for different ways of dealing with a disease, such as preventing it before it happens or waiting until it happens and treating it.

TL: Is the term “cost effective” misused ?

LR: The term once meant cost savings, because it was used in situations where you were getting exactly the same result either way and just wanted the cheapest way to get that result. It still carries that connotation, but now we are looking for the most effective way to spend money. If it costs $5000 to save one year of life with smoking cessation programs, and $200,000 to save one year of life with statins, then we say smoking cessation is more cost effective than statins. But neither one saves money.

TL: What is the conflict between making such choices and marketing new products?

LR: If you make a new product, you want to sell it, but it may not be the most effective thing for peoples’ health, or the most important thing to spend money on. The conflict is between the seller and the health policy maker who wants to make sure that people’s health is well served.

TL: Are we spending our prevention dollars inappropriately?

LR: There is some evidence that we are. We should be making sure that the elderly get flu shots, for example. A survey of five countries, including the U.S., indicated that the U.S. may already do more prevention than other countries, but we are living proof that more prevention does not reduce medical spending. New Zealand, Australia, the UK, and Canada all spend less of their GDP on medical care and have longer life expectancies. To me, flu shots illustrate the problem. Those countries emphasize more cost effective interventions like flu shots, instead of annual Pap smears, which are far less cost effective.

TL: Is cost effectiveness about depriving people of care? In other words, does it bring about the “r” word—rationing?

LR: No, it’s about making sure that people get the most valuable and effective stuff first. We spend a lot of money on interventions that don’t bring us much benefit, like statins for people with moderately elevated cholesterol and few or no other risk factors for heart disease. The idea is to make sure we are doing the most effective stuff first.

TL: How do other countries engage in cost effectiveness activities?

LR: Other countries often require drug makers to provide cost effectiveness analyses of drugs that the manufacturers want covered by health insurance. Government panels that review the analyses can decide that the drug is not cost effective enough to warrant coverage, although the manufacturer can still sell it. Managed care plans and pharmaceutical benefit managers in the U.S. may use cost effectiveness analysis in deciding which drugs to include on their formulary lists.

Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.