Study Raises Questions About Cost Savings From Preventive Care

By Lori Montgomery
Washington Post Staff Writer
Tuesday, September 1, 2009

Preventive services for the chronically ill may reduce health-care costs, but they are unlikely to generate the kind of fantastic savings that President Obama and other Democrats have said could help pay for an overhaul of the nation's health system, according to a study being published Tuesday.

Using data from long-standing clinical trials, researchers projected the cost of caring for people with Type 2 diabetes as they progress from diagnosis to various complications and death. Enrolling federally-insured patients in a simple but aggressive program to control the disease would cost the government $1,024 per person per year -- money that largely would be recovered after 25 years through lower spending on dialysis, kidney transplants, amputations and other forms of treatment, the study found.

However, except for the youngest diabetics, the additional services would add to overall health spending, not decrease it, the study shows.

"There's no free lunch here. Prevention will not pay for everything. But it's not as expensive as it looks at first blush," said Michael J. O'Grady, a senior fellow at the National Opinion Research Center at the University of Chicago, and one of four authors whose work is being published on the Web site of Health Affairs, a leading journal of health policy research.

The study comes a week before lawmakers are due back in Washington to continue the debate over Obama's signature domestic initiative, a debate that has come to focus heavily on cost. With budget deficits soaring in the wake of a global recession, Republican critics -- and a growing number of moderate Democrats -- say the nation cannot afford a vast expansion of the health-care system unless it includes measures to reduce federal spending on care over the long term.

In response, Obama, House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny H. Hoyer (D-Md.), among others, have promised that health-care reform will save money, in part by increasing the availability of preventive care. In addition, Pelosi and Sen. Tom Harkin (D-Iowa) have chastised the Congressional Budget Office, the nonpartisan arbiter of the cost of legislation, for failing to include such savings in the estimates of pending reform bills.

The new research offers them added ammunition, arguing that the 10-year horizon typically used by CBO analysts is too brief to capture the savings that eventually result from improved public health. The authors -- who include two University of Chicago medical professors as well as O'Grady and James C. Capretta, who both served for years in various health policy positions in Washington -- suggest that the CBO instead use a 25-year "budget window" to calculate the cost of prevention programs.

"I'm trying to show them that there are other ways to do this, as we face these new challenges from the epidemic of chronic illness," he said. "They're used to thinking like economists. And their friends at Health and Human Services are used to thinking like actuaries. But there's this third way, which is epidemiological, which shows us how a disease progresses over time."

Legislation introduced by House Del. Donna M. Christensen (D-U.S. Virgin Islands) would explicitly permit key lawmakers to ask the CBO to use a longer horizon when estimating the cost of preventive care, a development that concerns some independent budget analysts, who count on the agency for objective analyses. The CBO's official estimates do not take into account savings accrued beyond the 10-year window, in part to prevent lawmakers from counting on savings that may never materialize.

"One of the reasons I worry about rescoring prevention and wellness and pressure on CBO to do it is because [reform advocates] are looking for magic bullets," said Robert Bixby, executive director of the nonprofit Concord Coalition, which urges deficit reduction. "I don't see how they can pay for what they want to do."

But CBO Director Douglas W. Elmendorf said the agency already has the authority to look at costs over a longer term, though not in the context of official estimates. He called the new study, which has been reviewed by CBO staff, "exactly the sort of research that we use in building our cost estimates. And we will consider these findings in future estimates we do in this area."

In its own analysis of preventive care, CBO said earlier this month that the cost of making cancer screening, cholesterol management and other services broadly available is likely to far outweigh any savings ultimately generated. The new study looks at a more narrow population -- people already diagnosed with diabetes -- and projects the cost of providing them with a very specific regimen of frequent checkups and diagnostic tests that has produced predictable results in clinical trials. (Treatment for other forms of disease may vary in their costs.)

For diabetes patients, only about two-thirds of that cost would be recovered in the first decade, when fewer complications materialize, and more than three-quarters would be recovered over 25 years, the study found. Only for the youngest patients, those aged 24 to 30, would spending on preventive care wind up producing a net savings: the study calculates that $21 billion spent on younger patients would cut overall spending on their health care by $6 billion over 25 years.

The study was funded in part by the National Changing Diabetes Program, which is primarily funded by Novo Nordisk, a maker of diabetes medicines.