Congressional Budget Expert Says Preventive Care Will Raise — Not Cut — Costs

By MichaelJames

Aug 9, 2009 9:27am

In yet more disappointing news for Democrats pushing for health care reform, Douglas W. Elmendorf, director of the Congressional Budget Office, offered a skeptical view Friday of the cost savings that could result from preventive care — an area that President Obama and congressional Democrats repeatedly had emphasized as a way health care reform would be less expensive in the long term.

Obviously successful preventive care can make Americans healthier and save lives. But, Elmendorf wrote, it may not save money as Democrats had been arguing.

"Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall," Elmendorf wrote. "That result may seem counterintuitive.

"For example, many observers point to cases in which a simple medical test, if given early enough, can reveal a condition that is treatable at a fraction of the cost of treating that same illness after it has progressed. In such cases, an ounce of prevention improves health and reduces spending — for that individual," Elmendorf wrote. "But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses. To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. … Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

Elmendorf offered this assessment in a letter (you can read it HERE) to Rep. Nathan Deal, R-Ga. Rep. Frank Pallone, Jr., D-N.J., Henry A. Waxman, D-Calif., and Joe Barton, R-Texas, were cc'ed.

Responding to the CBO letter, Linda Douglass, the communications director for the White House Office of Health Reform, said that, "to work, prevention has to be targeted. Proven services need to be directed to populations that need it, as the CBO letter suggests. We will continue to work with Congress on ensuring that dollars are spent on prevention that gets the biggest bang for the buck."

Douglass argued, however, that there would be long-term financial savings, saying "we can't forget that many of the benefits of prevention will accrue to the Federal government in thel long term as opposed to the near term. Prevention results in longer, healthier, more productive lives — yielding savings that don't typically show up on a score sheet.  We have to return to common sense: keeping people out of a doctor's office or hospitals saves money. Seventy-five per cent of our health care spending goes to treat chronic diseases, many of which could be prevented from developing in the first place . Proven preventive services are worth it."

In their continuing struggles with CBO, Democrats from President Obama on down have expressed frustration that Elmendorf doesn't give Democrats' health care reform proposals sufficient credit for cost cutting through preventive care.

"One of the things that's disappointing about CBO — and frustrating — is all the work … done on prevention" that the CBO doesn’t factor in, Sen. Chris Dodd, D-Conn., co-author of the Senate Health Education Labor and Pensions Committee legislation, recently griped.

"You don't get the benefit in CBO of cost-savings with prevention programs,” Dodd said. They'll tell you how much an anti-smoking program may cost. They don't tell you the benefit occurs when a number of people stop smoking."

During the health care town hall meeting, President Obama said, "the Congressional Budget Office, the CBO, which sort of polices what all various programs cost, they're not willing to credit us with those savings.  They say, ‘That may be nice, that may save a lot of money, but we can't be certain.’ So we expect that not only are we going to pay for health care reform in a deficit-neutral way, but that's it also going to achieve big savings across the system — including in the private sector where the Congressional Budget Office never gives us any credit — but if hospitals and doctors are starting to operate in a smarter way, that's going to help you even if you're not involved in a government system."

Before that, House Speaker Nancy Pelosi, D-Calif., said that "it's always been a source, yes I will say frustration, for many of us in Congress that the CBO will always give you the worst-case scenario on one initiative and never … any credit for anything that happens if you have early intervention, health care. If you have prevention, if you have wellness … you name any positive investment that we make, that we know reduces cost, brings money to the Treasury in the case of education but never scored positively by the CBO. Yes, it is frustrating."

Pelosi said, "I hope we will see them say, 'This is what we see the cost of something. We have not accounted for the benefits' because they don't and they haven't and it should not be inferred from what they do that they have."

Not quite.

Elmendorf cited an article published last year in the New England Journal of Medicine which he said provides a good summary of the available evidence on how preventive care affects costs..

The article by Joshua T. Cohen, Peter J. Neumann and Milton C. Weinstein, “Does Preventive Care Save Money? Health Economics and the Presidential Candidates,” was recently updated and can be read HERE.

The authors of that NEJM study wrote that "Sweeping statements about the cost-saving potential of prevention … are overreaching. Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs. For example, screening costs will exceed the savings from avoided treatment in cases in which only a very small fraction of the population would have become ill in the absence of preventive measures. Preventive measures that do not save money may or may not represent cost-effective care (i.e., good value for the resources expended). Whether any preventive measure saves money or is a reasonable investment despite adding to costs depends entirely on the particular intervention and the specific population in question."

The authors based their conclusions on an analysis of the Tufts–New England Medical Center Cost-Effectiveness Analysis Registry. They concluded, "Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not."

Wrote Elemendorf, "After reviewing hundreds of previous studies of preventive care, the authors report that slightly fewer than 20 percent of the services that were examined save money, while the rest add to costs."

CBO also cited a study in Circulation magazine called "The Impact of Prevention on Reducing the Burden of Cardiovascular Disease" (read it HERE) that "estimated the effects of achieving widespread use of several highly recommended preventive measures aimed at cardiovascular disease — such as monitoring blood pressure levels for diabetics and cholesterol levels for individuals at high risk of heart disease and using medications to reduce those levels. The researchers found that those steps would substantially reduce the projected number of heart attacks and strokes that occurred but would also increase total spending on medical care because the ultimate savings would offset only about 10 percent of the costs of the preventive services, on average."

-jpt

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