life are more likely to retire early than are people who do not experience a serious illness at that age (Smith, 1999), which reduces their lifetime earnings. Adolescents who are diagnosed with depression are less likely to get a college degree than are those not so diagnosed (Berndt et al., 2000) and thus are likley to earn less over their lifetime. Advances in interventions that alleviate these health burdens could substantially reduce the public-sector financial burden. In any case, a central economic challenge facing the public sector is how to prepare for an aging society.


The medical system is an important part of health. Indeed, public discussion about health focuses to an overwhelming degree on access to medical care. Understanding how the system operates and how well it works is therefore a central issue for behavioral and social research. We address three issues of concern in current and future evaluations of the health care system: (1) the effects of medical care on improving health, (2) the managed care debate, and (3) growing public interest in alternative medicine.

Effectiveness of Medical Care

Research shows mixed results regarding the value of the medical system. We illustrate these issues with medical care for the elderly, but the same issues apply to those who are not elderly, for example, asthma in children or disease transmission in teens and young adults. Some research highlights the positive effect of medical care on improving health. As noted above, one of the leading theories for reduced disability among the elderly is that such advances result from medical technology improvements. This view is widespread among biomedical researchers: medical advances, they believe, embodied in new technologies lead to significant health gains. Other research, however, highlights the apparently low return from additional medical spending. For example, Medicare spending varies by a factor of two among areas of the country, with no apparent differences in health outcomes (CECS, 1998). Research on heart attack patients shows that intensive procedures are used up to five times more frequently in the United States than in Canada, but mortality rates are the same in the two countries (Rouleau et al., 1993; Mark et al., 1994; Tu et al., 1997). Indeed, within the United States, people who live close to high-tech hospitals receive intensive services more frequently than people who live farther away from such hospitals, but again health outcomes are essentially the same (McClellan et al., 1994). The value of additional medical spending is therefore unclear and is a needed avenue for future research.

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