May 4, 2021

Economics of prevention

 An Ounce of Prevention

I look at prevention through an economic lens and make three main points. First, those advocating preventive measures are often asked how much money a given measure saves. This question is misguided. Instead, preventive measures can be thought of as insurance, with a certain cost in the present that may or may not pay off in the future. Although most medical preventive measures improve expected health, they do not save money. Various lifestyle and early childhood interventions, however, may both save money and improve health. 

Second, preventive measures, including medical and lifestyle measures, are heterogeneous in their value, both across measures and within measure, across individuals. As a result, generalizations in everyday  discourse about the value of prevention can be overly broad. 

Third, health insurance coverage for medical preventive measures generally should be more extensive than coverage for the treatment of a medical condition, though full coverage of preventive services is not  necessarily optimal

Well, and Joseph Newhouse says:

At one time, it was common to hear arguments that clinical preventive services were not insurable because they were “not a random variable and hence not an ‘insurable risk’” (Zweifel and Breyer 1997). Zweifel and Breyer give the example that “it is hardly conceivable that a health insurer would ever cover  expenditure on items such as . . . atomizers that help to prevent respiratory disorders;” a similar point could be made about a flu shot or mammography. There are, however, both economic efficiency and behavioral arguments for many preventive measures.

It may be arguments, but not so much incentives in private insurance market. For example, why vaccines have been bought by governments?. That's all. A misguided article.