Investing in Health: Ouch!

As anyone who has gotten sick or injured recently can attest, medical costs are high and climbing rapidly. Last year, Americans and their insurers together paid out some $2.25 trillion for health care, notes Stacie M. Propst , vice president for science policy and outreach at Research!America . It’s a public-interest group based in Alexandria, Va. Today, spending on health constitute “a huge portion of our overall economy,” she says — “16 percent and rising.

How much of that very substantial sum went to finance research? In 2007, it totaled a little more than a nickel out of each health-related dollar spent, Propst’s group has just calculated. But that probably shouldn’t come as a surprise, she adds, because health research “has had flat funding now for six years in a row. And that is devastating.” Why? Currently, only one or two out of any 10 projects from scientists around the country that are competing for NIH grants actually gets funded. Contends Propst, “That means that many ideas do not get funded and we miss out on learning what the pursuit of those ideas might have provided in the way of knowledge, cures and treatments.”

As to who is spending how much on research and development in health-related fields: industry contributes an estimated $68.3 billion and the federal government invests some $38.1 billion ($29.1 billion of it through the National Institutes of Health). The remainder comes from institutional funds at universities, from state and local governments, philanthropies and more.

Clearly, even a small amount of a very big number — like $2.25 trillion — is nothing to sneeze at. However, spending by many of the bigger health-care-research investors hasn’t been keeping up with inflation, Propst notes.

For instance, NIH spending — which dwarfs that from any other federal source — has remained stable, but not increased a bit each year to account for inflation. The result: Its research budget lost 12 percent of its purchasing power throughout the past four years, Research!America finds.

Propst’s group has mined spending reports from all over the place to develop its composite picture for the health sector. The group’s research-investment figures contain some intriguing numbers that beg further explanation — like the fact that the Department of the Interior spent $181 million on health R&D last year while the Food and Drug Administration ostensibly scraped up only $138 million for its studies. Even more curious: The Departments of Defense and Agriculture together spent $2.7 billion on health research. That’s 3.3 times as much as the Department of Veterans Affairs spent, 4.8 times as much as the Centers for Disease Control and Prevention invested last year and nearly 6 times as much as the Environmental Protection Agency’s health- research budget. Go figure.

As much as I value R&D investments, I acknowledge that it’s only smart to expect a major retrenching from last year’s spending if either 1) the administration’s bailout plan clears Congress and diverts some three-quarters of a trillion dollars on saving financial institutions, or 2) the bailout fails and so do many more banking institutions and insurers, creating a recession or worse.