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

August 09, 2009 9:27 AM

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

August 9, 2009 | Permalink | Share | User Comments (137)

User Comments

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Lifestyle change in an individual choice and depends on the person (or one's personality). People with true grit are motivated to achieve a fitness goal no matter what. Personally I am not one of those who can persevere through pain and setbacks. Here is my story.

I'm 45, and earlier this year I tried to change my lifestyle to lose weight and lower my risk for heart disease. My doctor encouraged me and even recommended a particular gym. So, I joined a health club and faced my gym-phobia head on (I've been afraid of returning to a gym since I had injured my knees 20 years ago when the trainer showing me how to use the leg press machine set the weights too high).

Things were going fine after the first month, and then my left side of my ribs started to hurt. The doctor thinks it was re-injury caused by the rowing machine (originally injured it when I fell off my bicycle years ago and hit the pavement on my left side). While my ribs healed, I started riding longer and using higher resistance on the stationary bike, as well as additional riding on my mountain bike on weekends. I thought the soreness after finishing a ride would go away after a day or two. However, from my previous experiences with knee tendinitis, I noticed it got worse after each workout. So I stopped exercising to heal. I did lose five pounds before I stopped, and I still continue my attempt to eat healthier.

Losing weight is easier said than done. I've had nothing but injuries since my "lifestyle change." Sedentary people with a history of previous injuries can easily get hurt, discouraged and eventually quit. It's like choosing between a lesser of two evils. 1) become more active and risk pain and injury to various parts of your body OR 2) remain sedentary and overweight and increase your risk for heart disease, stroke, diabetes and a shorter life in general. I feel like it's a no-win scenario.

Posted by: TB | Aug 17, 2009 10:57:17 AM

Mr. Elmendorf seems to understand nothing about prevention. Prevention is NOT primarily about more diagnostic testing. To see why, imagine a person whose lifestyle includes every behavior known to be associated with a high risk for HIV infection--and this person gets tested for HIV once a week, like clockwork. Does all that diagnostic testing have anything to do with prevention? Of course not.
The essence of prevention is encouraging beneficial lifestyle change. Prudent diagnostic testing can help also, but in the absence of lifestyle change, it is meaningless.

Posted by: Steve Tiger | Aug 17, 2009 9:11:58 AM

Looking at individual costs is the wrong methodology. We have to look at this as epidemiologists do.

Currently we spend $7,000/year per capita for health care in America, more than double any other nation. We also pay that $7,000 for the 50 million people without health insurance. So right off the bat, we're wasting $350 billion a year.

Where does it go?

That's almost exactly the amount insurance companies pay to "administer" insurance, to run the process to try to make sure no uninsured person gets health care they didn't pay for.

It costs us more to NOT deliver the care than to do it right.

Cost savings are realized easily over a population of 350 million -- but, no, you can't pinpoint it for any one person accurately. For 100,000, the accuracy is deadly. For 350 million, the savings are easy to find.

Posted by: Ed Darrell | Aug 17, 2009 5:00:03 AM

Have these guys ever been to England? They all smoke like chimneys and drink like fish. After 6 months of hanging out in pubs to have a normal social life, I had fallen off Atkins, put on 30 pounds, and was a "social" smoker. When the Government is picking up the tab, who needs to take care of themselves.

Posted by: Armando | Aug 14, 2009 6:32:50 AM

life expectancy is not a "good" number either. We kill of more people due to urban vioence. plus our diets suck. so other facors influence life expectancy beside health care

Posted by: seth | Aug 13, 2009 8:02:02 PM

KR,

It's always possible to point to an anecdotal example and say, "See? They pay more in Germany than we do." Yet we know they pay less per capita, individual examples to the contrary notwithstanding.

As for U.S. citizens receiving a higher quality of care--I suspect you know that's not what the WHO says. In the U.S. there's a great deal of disparity in the quality of health care we receive based on our incomes.

I'd say it must be quite difficult to objectively measure the overall quality of a health care system for an entire nation. There are so many different factors to look at, and so many different ways to weight those factors, that any attempt to do such is destined for controversy.

But there ARE objective factors, such as life expectancy, that are easier and less controversial. Yet even on that measure the U.S. fares poorly compared to most other developed nations. It seems the greater availability of those high tech procedures you mention is not helping us live longer.

Maybe we can do without some of those expensive high tech procedures that don't seem to be helping anyway? And it could be some of those same procedures are a part of why the NEJM says preventative care costs rather than saves?

What about simple basic types of preventative care such as getting regular checkups? If the NEJM article included that then I must have missed it, yet that should certainly be included into the equation. I have a hard time imagining that simple regular medical checkups would not fall on the 'benefit' side of any cost/benefit analysis. There are so many different things that can be discovered or improved in that way, though, that it would be more difficult to do such an analysis.

Currently the millions of uninsured Americans have no realistic access to those basic checkups.

Posted by: mystylplx | Aug 11, 2009 2:06:21 PM

"We pay more for health care in the U.S. than any other developed nation. That's unacceptable."

This is very misleading. Generally speaking, an American will get more procedures and more newer technologies than these other developed nations, and that costs more money. Good health care costs good money, period. That doesn't change no matter where you are. Many of these nations have completely different liability insurance, in some cases not even required because you cannot sue. But also if you really look at it, you'll see that they pay MORE into their system and get less out. So when you say thats "unnacceptable", I think someone has convinced you that its a bad thing that more money is spent on you than they do over there. That's not necessarily true.

"How is it that other countries can manage to provide a higher quality of health care for ALL citizens at a lower cost per capita?"

Again, not really true. Most of the newer technologies, such as laser spine surgery, is not available under the government plan (gov. won't pay for it). The government, in its infinite beauracracy, takes forever to approve new technologies. Also in terms of critical care, the US is the admitted leader in many critical care areas. And ALL of our citizens already do get health care, they don't all have health insurance, which is different. And again, the lower cost per capita is misleading. To give you an example..

My in-laws live in Germany. They make a combined household income of around 90k a year. They pay 12% income tax for their health care. That comes out to about 1,000 Euro (1340 US) per month. My wife and I have an employer share plan that costs a total of 700 a month, has no deductables and mostly no copays. Germany just put in a $15 copay. My father in-law had back surgery 3 times, once to fix a disc, twice to try and fix scar tissue. After doing some research, they found that laser spine surgery works very well to remove scar tissue. However, government won't pay for it.

So I don't believe for a minute that the quality is better, but I do believe they pay less because the government approves less to pay.

Posted by: KR | Aug 11, 2009 8:57:27 AM

It seems after reading the article and all of the comments my personal summary is.
There is no real evidence that preventive care will reap large cost savings for health care. The preventive care might be worth doing but can not be justified by solid cost savings. Several people argue that the increased output from a healthier population will produce a greater flow of taxes to the treasury. Others point out that prolonging life also adds to health care and the social security burden of the tax payer.

Posted by: merchantilist | Aug 11, 2009 4:28:04 AM

Few will read far into the CBO letter, so let me offer this missing highlight:

"...Treatments for existing medical conditions range from those that save money to those that cost money in much the same way that preventive services do: About 20 percent save money, and about 60 percent have costs that many consider reasonable relative to their benefits, according to the study cited above. Thus, not only preventive services but medical services more generally could be evaluated in order to encourage high-value services of both types and discourage low-value ones."


Exactly!

Ergo, by selecting which preventive care to reward and increase, it is possible to reduce costs, especially when non-medical costs are included.

Posted by: Hal Horvath | Aug 10, 2009 11:21:17 PM

How about considering the fate of the person whose condition is discovered early.
Gosh, I hate to put a human face on this, but isn't health what the aim is?
If it costs a few more bucks on the average, what about factoring in the increased productivity of a healthy society?
Once again, Tapper goes for the big headline...damn the torpedoes and damn the big picture.

Posted by: Wayne | Aug 10, 2009 9:49:02 PM

JNinCA,

Well that certainly proves tort reform brings down medical costs. Not.

Ever heard the term "anecdotal evidence?" Did it occur to you it might make a difference which particular zip codes you tried? Both Ca. and NY have lots of zip codes. Plus there are more factors involved than tort reform.

Q. Alaska also has tort reform, so why are their health care costs also so much higher?

A. It aint that simple.

Posted by: Mystylplx | Aug 10, 2009 5:49:18 PM

KMDay:
I guess Boxer meant that only
Hoboes are authentic protesters!
I assume she will only accept
contributions from Hoboes for her
next re-election campaign.
Good luck with that, Barbara!

Posted by: reaganfan | Aug 10, 2009 4:54:16 PM

I guess the CBO must belong to
that right-wing Republican Mob that's
against President Obama's Healthcare
Plan! Not!
Anyone who disagrees with the dictator
must be chastised and banished from
the country.
2012 can't come soon enough!

Posted by: reaganfan | Aug 10, 2009 4:49:51 PM

Well, I'm a little late to the party here, but in case anyone reads this far, let me mention something I found out. I pay $100/month for my excellent health insurance here in Calif.

Last week, someone told me how expensive insurance is in New York. So I went to my insurance agent, and priced my insurance policy with a New York zip code. It was $370/month.

The difference? California has a cap on medical malpractice awards. (Look it up.) Tort reform works, in spite of the pseudo statistics the lawyers on this page throw around.

Posted by: JNinCA | Aug 10, 2009 4:43:55 PM

KR, if you know an ER that will charge a mere $2000 for an overnight stay I'd love to hear about it. For overnights you're looking at more like ten times that.

But you're right about the real costs-- but then that's the point, isn't it? We are already paying, one way or another, for health care for the uninsured.

This bill is far from perfect, but then it is still a work in progress. We pay more for health care in the U.S. than any other developed nation. That's unacceptable.

How is it that other countries can manage to provide a higher quality of health care for ALL citizens at a lower cost per capita?

Posted by: mystylplx | Aug 10, 2009 4:41:09 PM

"The cost of this is 20+ times what a regular office visit would cost and we all pay for it."

Actually sort of. Hospital care in general is very expensive precisely because people who do not pay go there, and those costs are passed on to patients that go there with payment plans. So that $2,000 a night bed and breakfast at the hospital probably only costs a few hundred bucks, the rest goes to pay other peoples bills. So though you are correct, its a little more complicated than you state.

I don't however, believe government insurance will fix this without severely limiting the rest of us. Plus there is coverage available for people who are poor, called medicaid, which does in fact pay for many of these people if the hospital sees they qualify. More times than not, the hospital will tell people to fill out the medicaid forms if they realize they qualify for medicaid.

Really we are talking about people along the divider line, above medicaid qualification and below employer insurance and its a mixed bag. I think we can find better ways to fix it than this bill.

Posted by: KR | Aug 10, 2009 4:19:23 PM

Another thing the CBO doesn't take into account is the cost of uninsured using the emergency room as their regular doctor. Emergency rooms, unlike regular doctors, cannot turn anyone away, so the uninsured frequently go their with non-emergency complaints because it's the only way they can get a doctor to see them.

The cost of this is 20+ times what a regular office visit would cost and we all pay for it.

Nor do they account for the "preventative care" associated with simple regular checkups which require no expensive tests, often can catch things early, and which the uninsured have no access to at all. Even those emergency room visits don't usually include a full examination--they only treat the complaint.

Posted by: mystylplx | Aug 10, 2009 4:00:10 PM

The link: ...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...

An intervention is "cost-saving" if it reduces costs while improving health. Poorly performing interventions can both increase costs and worsen health...

Our findings suggest that the broad generalizations made by (President Obama) can be misleading. These statements convey the message that substantial resources can be saved through prevention. Although some preventive measures do save money, the
vast majority reviewed in the health economics literature DO NOT...

Posted by: Left wing is the new right wing | Aug 10, 2009 3:23:44 PM

The great irony here:

The CBO letter clearly admits, deep in the middle, that Preventive Care could indeed cut medical costs!

But...it's hard to figure that out with the headlines and certain oddly edited summary sentences in the letter.

See my previous comment below for details.

Posted by: Hal Horvath | Aug 10, 2009 11:19:35 AM

"--"Tort reform" is the desperate slogan of those seeking to limit victim's rights.--"

No, how about this. Lets just make it so that it matches an already established government award system? Like say, the VA disability system? If its good enough for our soldiers, isn't it good enough for the average citizen?

SLGI (in case of death)= 400k
100% disablity = $2600 a month plus medical

Why not just use this payout system for malpractice/negligence? OH because laywers won't make millions off of it. And class action lawsuits? Where the patients get a few hundred bucks and lawyers walk away with millions in their pocket? Shouldn't this be illegal?

Posted by: KR | Aug 10, 2009 9:44:13 AM

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