Your Money or Your Life: Strong Medicine for America's Health Care System

First, a disclaimer: Professor Cutler was on my dissertation committee, so I am certainly biased in his favor. Your Money or Your Life does an outstanding job of taking important work from the economics literature and translating it for the intelligent lay audience. I have found it a very useful text for various health economics courses from the firstyear undergraduate level to the masters level. The book has two main strengths: (1) it lays out, succinctly and readably, how economists think about the value of health care, and uses those tools to evaluate health care advances. The first half of the book does a wonderful job of reframing health care reform away from "how can we keep costs down?" and into "how can we get value for our money?" (2) it discusses, again succinctly and readably, the role that incentives play in delivering health care. Cutler argues strongly that we get what we pay for--that is, if we pay doctors more for intensive care, what we get is more intensive care, which isn't identical to higher quality care. The book's strengths are thus in framing the health care discussion. Some reviewers are criticizing the book for not dealing with various other crucial issues in health care. The book's goal is not to serve as a comprehensive textbook on health economics; such books exist, but this isn't one of them. Readers who disagree with the short section on proposed solutions would still, I think, benefit from Professor Cutler's excellent discussion of the problems.

since nothing is perfect. Authoritative, clearly written, and quite interesting; I recommend to anyone -- professionals, academics, laypersons -- interested in these issues. Specifics: 1) The first 5 chapters convincingly argue that the enormous increases in health care spending are first attributable to new technology and treatments, and well justified, benefits substantially exceed the costs. The arguments are based in substantial part on Cutler's own academic research. By themselves, these chapters are sufficient to justify the book. Cutler does a good job of explaining both the technical economic concepts and the medical issues, and I suspect anyone interested in the topic will find the chapters fascinating, eye-opening. He reaches a very important conclusion: we ought to spend MORE, not less. 2) Subsequent chapters survey sources of waste and problems of distribution. I found these helpful in outlining some important problems, and well worth reading, but incomplete (see below). In part these explore the incentives created by different systems of paying for health care; this helps explain why some sorts of technologies and procedures are favored over others in any particular case. 3) The concluding chapter contains his solution to the problems, a system of universal insurance (mostly private) coverage, subsidized and supervised by the federal gov't; worth reading, but inadequate. Cutler focuses on a subset of problems & proposes a solution, with little consideration for other problems or possible solutions. For example, he ignores 'public choice' issues: how would his proposal work in a world of self-interested government official, bureaucrats, insurers, medical professionals, patients, etc.? The system he proposes might work on paper, but is quite susceptible to "gaming." USDA crop insurance is a real world example, and its poor performance should make us hesitant to expand this approach to health care. Similarly, Cutler argues that gov't and insurers should develop a payment system that rewards providers for measurable health improvements. Cutler greatly underestimates the difficulty. Soviet planners wrestled this problem for 75 years and were unable to solve it, how to specify a set of desired production outcomes from above and then have them realized as one envisions. It's a very difficult problem, I think unsolvable. Cutler underestimates it, and devotes essentially no attention to possible solutions which would make the individual consumer directly responsible for payment, and evaluation, of health care services. 4) Cutler provides a lengthy set of citations from the scholarly literature, excellent for further study. He also features, on his website, a technical appendix. It's clear he's trying to spread light, not heat, in the health care debate. Good on him! 5) Despite any weaknesses, Cutler does a fine job of framing the issues. The book is accessible and a good read. OK, OK, 4.9 stars. C.N. Steele Ph.D

This book is probably an important addition to the literature on healthcare economics. It offers a good corrective to the politics out there. It reminds us that healthcare spending is not wasted spending, in the sense that it almost always adds value. It also points out that in many ways the costs of healthcare are FALLING. The real question is how can we continue to improve the value of our healthcare dollar? Cutler concurs with many conservative healthcare analysts that the real problem is that the incentives in the American healthcare system are wrong. The incentives are aligned in favor of healthcare interventions rather than health. He proposes to address this incentive problem by having the government intervene in the market by providing the right incentives. In essence, the government would post-hoc realign the incentives by rewarding quality after-the-fact and beyond fees for services. In addition, he would subsidize insurance to create universal coverage. This is an interesting idea. At the very least, it makes the important observations that the current system is rife with market failures due to the government-imposed structure of the market. He does not seriously investigate other options. Both single-payer and conservative proposals are rejected with a single paragraph each. This probably misses some significant arguments from each. My sense is that he only sees one kind of market failure when there are at least two. The first problem has to do with incentives, which he sees. The second problem has to do with information that is not efficiently used. Many of the conservative thinkers on this have argued that IT ought to provide significant cost-savings. In essence, 13% of our economy is still operating without the information processing that has revolutionalized the information economy.

Forty million Americans lack health care insurance and costs leap three and four times the inflation rate yet few Americans feel the system provides adequate care. Harvard economics professor and health-care expert Dr. David M. Cutler believes that the problem lies with the inability for most people to understand opportunity costs based on choices that may not lead to an improved life quality. The government and medical leadership exacerbate the problem with saving money as their solution, ignoring effectiveness. He makes a strong case on how much health care has dramatically improved over the past five decades as dramatized by longer productive life spans. Dr. Cutler believes that more money should be spent on further medical advances and that universal coverage for all needs should be implemented so that the present day uninsured can afford care rather than drain at a more costly rate the system. The key is to change from a system that economically encourages doctors to choose techniques that are not always the best for the patient factoring in cost and life quality to a system that reimburses doctors for quality service (not as hard as it first sounds).Though at times the medical supply and demand is difficult to grasp, YOUR MONEY OR YOUR LIFE makes a powerful well written argument to reengineer a system in which political band aids fail everyone. The case for quality and the explanation of choices are well done and surprisingly easy to follow while offering a seemingly radical but compellingly logical approach to fixing the broken American health system.Harriet Klausner