The Wall Street Journal Health Blog has posted a helpful table summarizing the proposed savings in health care in the Obama budget. The source document is here (page 127-8).
Some of the Obama budget savings are inarguable assuming that they will pass Congress, including increasing drug premiums for high income Medicare beneficiaries and decreasing amount paid to Medicare Advantage plans. Others might be hard to achieve, including reducing readmission rates. Many of these potential savings will be controversial - including limiting itemized deductions for high income taxpayers, and employing radiology benefit managers. Some of the savings might lead to increased costs or decreased access elsewhere in the system, like cuts in home health payment rates.
The Obama administration is certainly not taking the "easy" road. The title of the budget document is "A New Era of Responsibility." It will be very interesting to see how this budget weathers the Congressional process.
The Commonwealth Fund and the Congressional Budget Office recently released competing estimates of the impact of various interventions on the federal deficit. The Commonwealth Fund's report is also explicit about the impact of these initiatives on overall health care costs - which is not the focus of the CBO report. I've pulled out five initiatives
1) Medical Home
2) Accelerate Health Care IT Adoption
3) Estabish a Center for Comparative Effectiveness
4) Increase tobacco tax
5) Place tax on sweetened beverages
The CBO suggests each of these will cause modest increases in the federal deficit, while the Commonwealth Fund analysis (performed by the Lewin Group) sees pretty substantial deficit reduction. The Commonwealth Fund's analysis is more in line with the budget proposed by the Obama administration.
I'm skeptical of the CBO's contention that raising taxes on sweetened beverages and tobacco will actually RAISE the federal deficit slightly. But it's important to note that the CBO's calculation of impact of the Clinton Health Plan on the federal deficit played a role in that plan's defeat. (See "The System" by Broder)
Keep your eyes on the Congressional Budget Office!
Comparative Effectiveness: Discordant Drumbeats
There is increasing interest in comparative effectiveness research – and the Annals of Internal Medicine has an editorial this week pointing to the importance of knowing the real value of what we are paying for. (Harvard Link) The stimulus package and the 2010 budget proposal both envision a large federal investment in such research, and the Congressional Budget Officehas even suggested that such research will save health care dollars (although perhaps not as many dollars as the research will cost). On the other hand, a heartfelt opinion piece in the Boston Globe last week by the CEO of the Society for Women’s Health Research, points out that what is good for a population might not be good for all individuals. Phyllis Greenberger says:
As the American comparative effectiveness agency is assembled in the coming months, administrators must take into account the personal needs of individual patients. If the council were to primarily focus on cost effectiveness, it would likely only consider the "average" patient. But in medicine, every patient is unique.
So – here’s a dilemma. It will be difficult (or impossible) to make cost-saving decisions that will not make anyone feel like they were given every chance. See a previous post on the woes of the National Institute for Clinical Excellence NICE in the UK. l Lowering health care costs means standardization and sometimes making tough choices and tradeoffs.
Another dilemma raised by opponents of using comparative effectiveness research to determine what should be covered is that costs decrease when there are competitors for effective innovations. There is an article in this week’s Annals of Internal Medicine (Harvard Link) reviewing cost-effectiveness of cholesterol-lowering therapy to prevent heart attacks. Cost-effectiveness is hugely dependent upon price. Before it became available generically, Zocor cost over $3 per pill, meaning that it was not cost-effective to use on even a small portion of the “at risk” population. On the other hand, generic simvastatin can now be obtained for only 10 cents a day, making it cost-saving (not merely cost-effective) for all patients with LDLs over 130 (a majori ty of the population). If we had not approved the use of Zocor at $3-$4 a pill a dozen years ago, we would not now have available one of the few cost-saving interventions in adult medical care.
