1. Young, Robert C. MD

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One suspects that Victor Fuchs, the author of Who Shall Live, would be very pleased to see the impact of the New York Timesop-ed piece by physicians at Memorial-Sloan Kettering on the subsequent reduction of the price of Zaltrap by the manufacturer. Dr. Fuchs has long argued that physicians ultimately control the cost of medical care through their decisions about hospitalization, diagnostic tests, and health care consumption. As he writes in this classic book, first published in 1974, "the person who is in the best position to exert intelligent restraints on costs is the physician."

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REVIEWED BY ROBERT C... - Click to enlarge in new windowREVIEWED BY ROBERT C. YOUNG, MD, Chairman,

This is the second expanded edition of this famous text on health economics. Dr. Fuchs, often referred to as the dean of health economics, is the Emeritus Professor of Economics and Health Research and Policy at Stanford. His original edition provides a succinct analysis of the health care system through the lens of an economist. In it he addresses some of the most perplexing issues in health care with sometimes surprising and counterintuitive conclusions. He makes the case that in most developed countries the marginal contribution of medical care to overall societal health is very small. Most of the variations in health outcomes are determined by genetic factors, environment, and lifestyle. Medical care has contributed mainly through scientific advances such as antibiotics, vaccinations, and blood transfusions rather than through the quantity of medical care provided.


It's quite sobering to realize that the totality of the medical care provided by physicians makes only a very modest impact on overall societal health. Fuchs emphasizes that the "caring" role of physicians often is more important to patients than the "curing" role.


Using mortality comparisons between states like Utah and Nevada and between countries like the United States and Sweden, he illustrates that lifestyle diseases like heart disease, lung cancer, and cirrhosis of the liver along with accidents and homicides account for major mortality differences and are not likely to be fixed through more or even better access to medical care. Indeed he shows that in countries with universal coverage like Sweden and England their health care system does not reduce mortality differentials across socioeconomic groups.


This in part explains why the United States spends more on health care than 10 other developed countries and continues to have worse life expectancies.


Fuchs has the ability to use simple formulas to illustrate complex issues without inserting value judgments. For example, Health Care Expenditures equal the quality of services times the quality of resources/quantity of services times the prices of resources. As a result one can only control costs by reducing services, producing services with fewer resources or cutting prices. He concludes by saying "each route causes pain for someone."


3 For Fuchs Vict Features of a Health Care Model

Although most of the book is a dispassionate analysis of the economics of health care, Fuchs does propose a health care model that he believes will improve our health care delivery system and control costs. The three features are:


1. Provide care through integrated health systems, which include hospitals, physician services, and drugs with reimbursement through capitation;


2. Create a large private center for technology assessment financed through a small industry-levy on all health care spending; and


3. To pay for it all, institute a broad-based tax (like a VAT tax) earmarked for health care to provide every American with a voucher for participation in a basic plan.



Although one cannot underestimate the challenges of implementing such a plan, it does represent a credible strategy worthy of serious discussion. Fuchs expresses some reluctance to utilize a system of government-managed health insurance. He is careful to point out that such a system must ultimately utilize some form of what he calls "upstream resource allocation"-control over capital investment in facilities and equipment, regulation of specialty mix and physician numbers, and control over the diffusion of high-cost technologies.


The book's text is full of interesting economic tidbits-for example, that health is linked much more strongly to educational level than even to wealth. The best evidence for this, he says, suggests it is due to "time preference-the rate at which people discount the future relative to the present" and to "self efficacy-people's belief in their capacity to exercise control over their own behavior and environment."


Fuchs dismisses the argument that health care costs should be whatever society allocates, as he emphasizes that health care dollars compete with education, housing, defense, and thousands of other goods and services that the public desires.


'Scientific Merit'

From an economic point of view he has a view that will not sit well with medical researchers. He states, "Contrary to the opinion of many medical researchers, the criterion of 'scientific merit' is not sufficient to form the basis for a rational allocation of medical research funds." Consideration should be given to the frequency of the disease, the morbidity and mortality, and the cost of prevention or successful intervention.


The book is a treasure trove of perceptive and dispassionately presented information. However, the text is seriously outdated. Much of the text and data are now nearly 40 years old. Statistics that point to a median eight-day stay in the hospital, an average physician annual income of $50,000, and information that 90 percent of all pharmacies are independently owned make the reader wonder what portions of the author's conclusions are currently applicable.


There is also no mention of the Affordable Care Act or how it might measure up to Fuchs' economic analysis. Even the updated portions of the edition are largely from analyses done in the 1990s.


This second expanded edition falls quite short of what the reader actually seeks. What is needed is a revised edition with the insights and economic models of this master health economist, illustrated with data and medical care models more relevant to the present than to the time of the first edition.


Still, even with this drawback, the book is a valuable historic and classical analysis of the economies of health and health care delivery.