Since 1971 when then President Nixon declared war on cancer society have awaited the breakthrough that would render the elimination of cancer as a societal and psychological boogie man. Interestingly the pursuit of this accomplishment has developed a certain type of viewpoint of how the future would operate after success with few individuals discussing how the world will change in both a positive and negative way. As counter-intuitive as it may seem would identifying a completely effective cancer treatment leave the world worse off than not identifying one at all?
At first thought almost everyone would find the above question preposterous citing both qualitative and quantitative rationalities for its ridiculousness. For example the National Institutes of Health (NIH) in 2008 estimated the annual costs of cancer to society were 201.5 billion (77.4 billion in direct medical costs and 124 billion in indirect mortality costs);1 those costs increased further in 2010 to $290 billion (154 billion in direct medical costs and 146 billion in indirect mortality costs).2 In 2007 cancer was responsible for approximately 13% of all human deaths globally (7.9 million)3 and in 2008 cancer killed another 7.6 million4 with overall occurrence rates increasing due to general increases in global life expectancies, changes in diets and lifestyles in the developing world, and changes to the environment. In addition there is the emotional damage that cancer afflicts against individuals who do not even have the condition (friends and family) that is not calculated in the mortality costs, regardless of whether or not the afflicted dies, raising economical and societal damage further.
Initially one may assume that the enormity of these numbers should dispel any individual arguing that a cure for cancer would be a bad thing, but the problem is that those numbers are only viewed through a positive lens not through a realistic lens. For example modeling economic costs associated with any condition or disease is currently simplistic and heavily dependent on certain assumptions. There are three common methods for estimating costs associated with various health conditions: Cost-of-illness (COI), Value of Lost Output (VLO) and value of statistical life (VSL).2
COI is the most common analysis method to calculate economic impact of an illness and assigned costs based on the sum of direct and indirect medical costs associated with the illness. Direct medical costs are sub-categorized as: diagnosis, drugs, hospital stays, surgeries, etc. Indirect mortality costs are sub-categorized as: transportation, income losses, pain and suffering reduced productivity, education, etc.5 Note that productivity losses (associated with indirect mortality costs) are typically modeled through the human capital approach, which calculates the potential production by an individual based on average wages adjusted for household productivity.5
The human capital approach is not the only method for calculating productivity, some analysis also use the friction cost method instead. Friction cost estimates the indirect costs of an illness relative to the amount of time it takes the employer/society to substitute the production lost from the individual who has taken ill.6 Basically costs are estimated by multiplying the number of days required for recovery by income and including an elasticity element for annual labor time versus labor productivity.6 Normally there is some form of time boundary (typically some number of days) associated with friction cost pertaining to the average expected recovery time for the illness. If recovery exceeds this boundary condition the excess costs are not counted towards the estimated production costs/losses. For example suppose person x contracts disease y that has an average recovery time of 30 days. If person x is not available to work for 17 days the productivity losses from all 17 days are counted. However, if person x takes 43 days only the first 30 are counted. This condition frequently results in lower estimated costs for a given disease because it typically does not encapsulate the more severe and costly cases of the disease.
COI also has two analysis “viewpoints”: prevalence or incidence. Prevalence estimates costs over a specific time period normally averaged to an annual cost, but does not focus on costs over the duration of the illness.5 Incidence estimates costs over the expected lifetime of an illness. Savings born from prevention strategies are derived from incidence-based analysis because of their timeline estimates over cross-sectional costs.5 While incidence estimates provide more information, they also require more assumptions and information, which can increase the probability for more inaccuracy in the results.
VLO estimates costs based on the impact on GDP with regards to lost capital, production, efficiency and other factors that affect commerce.2 VSL is categorized by two difference analysis methods: the human capital method and the mortality risk method.7,8 The human capital method calculates the present value of future income forgone due to death (similar to the method for COI). However, this method does not include intangible psychological elements on the family and friends of the deceased and ignores the non-working members of society who do not significantly act as human capital in the labor market.8 The mortality risk method calculates what costs members of society are willing to incur to change mortality risks from given illnesses. For example the World Bank classifies VSL as how people’s preferences affect the measurement of change (increase or decrease) in human well-being relative to the change in mortality risk based on the amount of money they would pay.9 Basically how much money would a person pay to reduce the chance of dying from disease A from 40% to 30%?
The reason these three methods exist is that they all examine economic costs relative to illness from different perspectives [public versus private (COI) or individual versus social (VOL) or some aspects of both (VSL) over different time periods]. However, because of these different analysis perspectives, along with complications due to co-morbidities, it is difficult to compare these methods directly.
Regardless of method calculating the possible savings from indirect costs is tricky. First of all productivity losses are more than likely overestimated because unlike past instances the current labor market functions on a shortage of jobs, not a shortage of labor. Of course some may argue against this point citing some of the higher paying jobs that have been vacant for years, but these jobs are highly specific demanding high education and experience levels, which are not available to a vast majority of the population, thus these jobs are radical outliers. Most modern vacant jobs are lower paying, but have high levels of competition including many individuals who are overqualified. Thus, most of the production from labor that is lost to cancer is more easily replaced now than in the past making the savings from curing cancer less than expected.
Another question is how the overall economy will be affected by the redirection of indirect cancer costs. For example current indirect cancer costs are high scale with a narrow focus (i.e. large amounts of money applied to a small section of the economy). If cancer is cured the indirect costs will be diverted more than likely at a smaller scale due to greater sector spread. Will this change in fund distribution result in a net gain or net loss for the economy? The loss of large-scale funds in the cancer treatment industry will result in job loss and contraction in this industry. The concern is that will the redirection of the funds be too scattered to significantly promote job growth in other fields, thus resulting in a negative economic impact? One counter-argument is that the new survivors will spend their money bolstering economic activity. While possible the real validity of this counter-argument is contingent on what happens to the assets owned by these individuals in probate and raises the question of whether government or private control of funds provides better stimulation to the economy.
Another concern is the increasing intracountry global inequality gap. While globalization has decreased the inequality gap between developed and developing countries, it has increased the inequality gap between rich and poor individuals within both developed and developing countries. Assuming that the general death total associated with cancer remains similar over the next 10 years as cited from 2007 figures above, then if a cure for cancer is discovered in 2015 over the next nine years 71.1 million people who should have died will live (and that does not include any offspring these individuals may have).
Note that the above estimate is probably on the low side because the World Health Organization (WHO) estimates that by 2030 at least 13.1 million worldwide will die from cancer.4 Based on the existing inequality level most of these survivors will not have vast amounts of wealth (this assumption makes sense because 70% of all cancer deaths in 2008 occurred in low- and middle-income countries),4 but instead will compete with other individuals for a pool of resources that is at best static and worst declining. This competition could place a greater strain on a vast majority of parties including those who developed cancer, but did not die, lowering the quality of life of a greater number of individuals.
Some may argue that while the savings born from indirect costs may be inaccurate and possibly non-existent, the savings from direct costs are certainly real and substantial. Direct cost savings are real, but more than likely will not be useful to society. The reason for this judgment is the commerce arrow that governs cancer treatment. When individual x develops cancer and receives treatment (note that second part) most of the time he/she has health insurance where after paying a deductible the insurance company will pay for a vast majority of the costs associated with the cancer treatment (80-100%, depending on the specifics of the plan). This payment will typically go to a hospital (most doctors do not own their own treatment centers, etc.). The hospital uses some of those funds to purchase elements of the treatment from various companies. Overall most of the costs associated with cancer treatment are born by the insurance companies, whether or not those costs are passed on to consumers is unclear, but is definitely a possibility.
If a cancer cure is developed, the direct costs of treating cancer will significantly drop reducing the amount of money that insurance companies pay to hospitals. Therefore, insurance companies will gain most of the savings from a cancer cure. However, the benefit to society from a standpoint of direct costs depends on what the insurance company does with these saved funds. There are ten common actions that a company can take with their earned profits:
1) Keep it on their balance sheet to pay for future expenses (i.e. suppose next year is not profitable);
2) Pay off existing debt;
3) Invest in new equipment or other modernization upgrades to increase production and/or lower costs;
4) Issue a dividend or increase the dividend to stockholders;
5) Hire more employees;
6) Increase wages and/or pay bonuses to various employees;
7) Buyback stock;
8) Invest in other companies either as a passive investment or a takeover;
9) Provide some benefit for the consumer (in the case of insurance this would most likely be reducing premiums);
10) Donate the money to a charitable cause;
There is little reason to suspect that insurance companies would pledge profit neutrality where insurance premiums would be lowered to correspond to the savings garnered by the cancer cure versus current cancer treatment. Whether legitimate or not the failure to lower premiums would be justified through arguing the prevalence of other chronic conditions like high blood pressure, obesity and high cholesterol. Anything else that could be done with the saved money that would benefit society directly or even indirectly like donating the money to charity, increasing stock dividends or hiring more employees seems even more far-fetched than lowering premiums.
With the most likely use of the saved funds going into the coffers of the insurance company to be used for CEO bonuses and other frivolous actions to bolster the already wealthy (modern reality dictates that this will happen) the newly saved direct cancer costs will not be reinvested into society at any real magnitude. Any rational person realizes that with decades of empirical evidence against it, supply side economics (a.k.a. trickle down) does not work thus increasing CEO bonuses is rather irrelevant to societal economic benefit. In addition other economic changes would lead various hospitals to lose millions of dollars (it stands to reason that they charge more for cancer treatments over the elements used in those treatments) and the medical companies that provide current cancer treatments will more than likely lose money as well because longer-term treatments yield more revenue than shorter-term treatments (which is what a cancer cure is assumed to be). Whether or not these losses will result in further expanded economic damage to society through things like a cutback in the existing workforce is unclear.
It is also important to address the fate of money devoted to researching a cancer cure. A vast majority of the money that funds cancer research comes from the government through the National Institute of Health (NIH), somewhere in the neighborhood of at least 5.6 billion.10 Therefore, it is reasonable to suggest that this money could be directed elsewhere from the NIH general fund to other worthy grant applicants. However, whether or not this will occur is unknown because of possible future cutbacks in NIH funds. For example some members of Congress may simply decide to eliminate a large amount of past cancer funding from the NIH in an inaccurate and foolish attempt to “cut government pork/waste”. While it is difficult for a legislator to cut funds for cancer research from a public relations standpoint, the public would not be so resistant to a cut in cancer funds that would have been redirected to say Chronic Fatigue Syndrome or something else.
The money derived from charitable organizations like the National Cancer Society is less likely to be recovered. Clearly the development of a cancer cure would heavily limit the continued functionality of such organizations. Most people who donate to cancer charities do so because of a personal connection to cancer, either they had it or know someone who has/had it. Therefore, it is unlikely that these individuals will donate to other charities if such a personal connection does not exist, they do not have a “charity donation quota” that needs to be met each year. Overall it stands to reason that most of the government funds for future cancer research will be directed to other medical research (unless Congress gets involved) and most of the private funds that would have gone to cancer research will not go towards other medical research. Some of these private funds could be invested in the economy yielding positive results, but the extent of benefit for such investment is unclear.
Part of the economic analysis associated with the possible societal influence of a cure for cancer is based on the assumptions that the cure would be widely available and will treat most, if not all, of the major forms of cancer. Initially it could be argued that the widely available assumption is not appropriate. However, the reasoning behind including this assumption is as followed. In the developed world it stands to reason that major insurance companies would cover the cost of the cure. This reasoning makes sense on two fronts: first, it is highly probable that a cure for cancer will cost less than the existing standard cancer treatment, thus it makes direct business sense for insurance companies that cover existing cancer treatments to shift coverage plans to cover the cancer cure.
Second, from a public perception standpoint any insurance company not providing coverage for a cancer cure would more than likely be basically ostracized from the marketplace with consumers avoiding that company in favor of one that does provide cancer cure coverage (recall that the assumption for this discussion is a cancer cure not a cancer vaccine thus people will still develop cancer). For the developing world it seems likely that various NGOs and charities will cover a majority of cancer cases with significant cost parameters.
So the general summary of change to society with the development of a cancer cure like treatment is as followed:
- Approximately 7.6 - 7.9 million people per year no longer die (assuming that the cure is available to all and that estimate may be on the lower end if cancer rates and deaths increase in the future which they are expected to);
- A vast majority of the direct costs associated with cancer treatment becomes increased profit for various insurance companies that will not result in an increased benefit to society;
- The growth/loss transfer to the general economy associated with indirect costs is unclear due to the simplistic level of modeling associated with cost replacement in the models themselves;
- The increased population will increase strain on existing resources, especially in developing countries, which have the majority of cancer deaths, as well as increase competition between individuals more than likely decreasing the quality of life of a larger number of individuals;
- There may be a contraction in employment at hospitals and other medical service companies, especially in high healthcare cost countries like the United States;
- Redirection of government grants and other monetary awards, both public and private, from cancer research to another medical condition/treatment should occur for government funds (again depending on how Congress acts), but not for private funds;
Understand that this blog post is not suggesting that the medical research community stop pursuing better cancer treatments, including one that may result in a cure, but instead is raising the important discussion point regarding how society may change in response to a cure. These changes are important to consider because of the momentous influence cancer as a physical disease and a psychological condition has on modern society. Cancer is in a rather unique position as a disease because while technically increasing age increases probability of development, no other disease permeates human health along all age groups at such a level of scale. Most other major diseases only afflict the elderly population. Therefore, eliminating this influence of cancer will cause significant change that must be accounted for and properly addressed to maximize the efficiency of curing cancer.
Overall it is troubling that no one really discusses these potential changes. Perhaps society is functioning under the belief that a cure to cancer is still decades away so addressing potential problems stemming from a cure is not necessary or that there will be no problems stemming from a cure. Neither of these explanations makes sense because there will be problems and even if a cure is delayed by decades developing a thought methodology to analyze how society could change is beneficial. Therefore, there are no excuses for the lack of attention being paid to possible negative societal changes that could be brought on by the development of a cure for cancer. As a starting point the most pressing issue for study is how the increased population will increase competition and possibly negatively influence society as a whole more so than if cancer is not cured.
Citations –
1. American Cancer Society. Cancer Facts & Figures 2012. Atlanta: American Cancer Society; 2012, page 1.
2. Bloom, D, et Al. “The Global Economic Burden of Non-communicable Diseases.” Harvard School of Public Health. World Economic Forum. 2011.
3. Wikipedia Entry – Cancer. 2013.
4. World Health Organization Fact Sheet N-297. Cancer. January 2013. In conjunction with Globocan 2008, IARC, 2010. http://www.who.int/mediacentre/factsheets/fs297/en/index.html
5. Corso, P, Soyemi, A, Lane, R. “Part II: Economic Impact Analysis. Cost of Illness.” Center for Disease Control and Heart Disease and Stroke Prevention.
6. Hutubessy, R, et Al. “Indirect costs of back pain in the Netherlands: a comparison of human capital method with the friction cost method.” Pain. 1999. 80:201-207.
7. Johansson, P. O. (2001). Is there a meaningful definition of the value of a statistical life? J Health Econ. 20(1):131-139.
8. Viscusi, W, and Aldy, J. “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World.” Journal of Risk and Uncertainty. 2003. 27(1):5-76.
9. World Bank. “The Effects of Pollution on Health: The Economic Toll, in Pollution Prevention and Abatement Handbook, World Bank, Washington, DC. 1998.
10. National Institute of Health. Estimates of Funding for Various Research, Condition and Disease Categories (RCDC) between 2009 and 2014. April 2013. http://report.nih.gov/categorical_spending.aspx
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