Cost Savings in Obama's Plan: The Congressional Budget Office Begs to Differ

Stuart Altman and his colleagues from the Heller School at Brandeis University gave a day-long primer on the future of health care finance at the Massachusetts Medical Society on January 31. The voluminous slides are available on this website.

Stuart Altman showed the graphic above, from a December report from the Lewin Group, demonstrating potential cost savings from the Obama plan. As you can see, there are substantial savings posited from medical home demonstration project ($133B over 10 years), adoption of health care IT ($111B over 10 years), comparative effectiveness research ($40B over 10 years) and disease management ($43.6B over 10 years).

The conference also reminded me that the Congressional Budget Office did a pretty comprehensive review in December of the estimated impact of 115 health care options on the federal deficit. CBO, a critical and neutral party, reviewed the available evidence for each potential option, and doesn’t find that many options with big cost savings. Remember, of course, that some initiatives could raise the federal deficit even if they lower overall health care costs.

1) Health Care IT (Option 46) would only save money if there were substantial (5%) penalties for non-adopters.
2) Adoption of medical home (Option 39) would increase the federal budget deficit by $7.8 billion over the next 10 years.
3) Disease management is not listed listed as an option in the 12/08 CBO report , and the Medicare Health Support project did not show substantial savings and was not completed. An accompanying CBO report suggests that there is not evidence of substantial cost savings from disease management.
4) Comparative effectiveness (Option 45) would increase the federal budget deficit by $860 million over 10 years. It would save $8 billion in health care - but most of this is not funded by the feds.

I’ll post more on the CBO report over the next few days – suffice it to say that most of the efforts that would actually lower the deficit substantially would either increase the uninsured, shift costs to consumers, or cut provider per-unit reimbursement substantially. As we get set to spend close to a trillion federal dollars in a stimulus package, it seems unlikely we will pursue a federal health care strategy that cost-shifts substantially away from the federal government in health care.