Preventive Care, Health Care Savings, And Yet More Bad Math From The Obama Administration

by Pejman Yousefzadeh on August 10, 2009

In a post written nearly four months ago, I linked to a news article (now expired; but there is a new link) which cast some doubt on the amount of savings that could be garnered through the greater use of preventive care. The Obama Administration claims that preventive care will help us cut health care costs, but the facts tell a different story:

He promised vast savings from increased spending on preventive health care in the face of doubts that such an effort, however laudable it might be for public welfare, can pay for itself, let alone yield huge savings.

In a blog post, CBO Director Douglas Elmendorf confirms the very basic fact that increased preventive care is going to cost more money:

Preventive medical care includes services such as cancer screening, cholesterol management, and vaccines. In making its estimates of the budgetary effects of expanded governmental support for such care, CBO takes into account any estimated savings to the government that would result from greater use of preventive care as well as the estimated costs of that additional care. 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.

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. 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. Judging the overall effect on medical spending requires analysts to calculate not just the savings from the relatively few individuals who would avoid more expensive treatment later, but also the costs of the many who would make greater use of preventive care.

Of course, just because a preventive service adds to total spending does not mean that it is a bad investment. Experts have concluded that a large fraction of preventive care adds to spending but should be deemed “cost-effective,” meaning that it provides clinical benefits that justify those added costs.

Even in cases where the provision of preventive medical care saves money, potential savings from expanded federal support might be limited depending on how frequently that service is currently provided. Many studies of preventive care compare the costs and benefits of a preventive service to the costs and benefits of doing nothing; in practice, a great deal of preventive medicine is already being performed, and many insurance plans already cover certain preventive services at little or no cost to enrollees. So a new government policy to encourage prevention could end up paying for preventive services that many individuals are already receiving—which would add to federal costs but not reduce total future spending on health care.

Assuming that it is not un-American to suggest this, may I humbly posit that the Obama Administration has some ‘splainin’ to do regarding this matter? Oh, and before anyone says anything, I think that preventive care is a wonderful thing. It ought to be practiced. It will increase not only lifespans, but quality of life as well. But let’s stop pretending that preventive care will be inexpensive. Quite the contrary; it will cost us a pretty penny, to say the least. And if the Obama Administration doesn’t factor the costs of things like preventive care into its calculations concerning the economics of health care reform, then why should we assume that its analysis is an accurate one?

UPDATE: Follow the links found here for more.

Previous post:

Next post: