The Congressional Budget Office And Cost Savings

Conservatives have an amazing skill for picking and choosing which facts to use to support their beliefs, and have absolutely no difficulty promoting contradictory claims if it supports their cause. Conservatives ignore the predictions of the Congressional Budget Office which show that the public plan would not be a threat to private insurance companies. They had no concern about their predictions as to the cost of the Iraq war.  They certainly don’t pay any attention to their predictions that tort reform would not significantly reduce health care costs. On the other hand they promote the report which says that savings will not fund health care reform.

Besides the contradiction of picking and choosing which CBO reports to pay attention to, conservatives fail to realize that one reason the CBO minimizes savings is that the bill does not give the government all that much power to lower costs. In other words, endorsing the CBO report contradicts conservative claims that the proposed health care reform would amount to a government take over of health care or socialized medicine. Conservatives oppose those measures which would lead to greater savings.

The other problem with the report is that the methodology used by the CBO under-estimates savings because they can only include savings which clearly can be measured and coded. Jon R. Gabel, a senior fellow at the National Opinion Research Center of the University of Chicago,  has reviewed the track record of the CBO and has showed that their methodology routinely underestimates savings. After giving some examples he concludes:

The Congressional Budget Office’s consistent forecasting errors arose not from any partisan bias, but from its methods of projection. In analyzing initiatives meant to save money, it helps to be able to refer to similar initiatives in the past that saved money. When there aren’t enough good historical examples to go by, the estimated savings based on past experience is essentially considered to be unknown. Too often, “unknown” becomes zero — even though zero is not a logical estimate.

The budget office has particular difficulty estimating savings when it considers more than one change at once. For example, last December the office reported that it found no consistent evidence that changes in medical malpractice laws would have a measurable effect on health care spending. It also reported that increased spending on studies comparing the effectiveness of different drugs and medical treatments would yield no net savings for 10 years. Yet if both malpractice reform and comparative effectiveness studies were instituted simultaneously, they might work together to yield substantial savings; doctors would gain more confidence in the effectiveness of less aggressive treatments and, at the same time, could use those treatments with less to fear from lawsuits.

The budget office’s cautious methods may have unintended consequences in the current health care reform effort. By underestimating the savings that can come from improved Medicare payment procedures and other cost-control initiatives, the budget office leads Congress to think that politically unpopular cost-cutting initiatives will have, at best, only modest effects. This, in turn, forces Congress to believe it can pay for reform only by raising taxes, which then makes reform legislation more difficult to pass.

The most likely reality is somewhere between the CBO report and the overly optimistic claims of the Obama administration. The CBO’s methodology has prevented them from considering health care savings from the proposed legislation–just as their methodology prevents them from recognizing savings which might come from tort reform–as there is no way to accurately measure the savings at this time. The proposed measures will ultimately save money, but it will also be necessary to spend more at first for measures like expanding preventive care and promoting computerization of medical records. Health care reform will probably save money, but I do not believe the savings will pay for the proposed measures.

Be Sociable, Share!

10 Comments

  1. 1
    gungho says:

    Yet if both malpractice reform and comparative effectiveness studies were instituted simultaneously, they might work together to yield substantial savings; The key word here is might. The one part of all this that is left out is personal responsibility. Too many use the hospital emergency rooms when there are cheaper alternatives, too many people do not eat healthy and too many do not follow the doctors orders or use the prescriptions. Malpractice reform has been touted in the past 3 decades many times with no movement. That is a change that probably not happen as most politicos are lawyers.

  2. 2
    Eclectic Radical says:

    “Too many use the hospital emergency rooms when there are cheaper alternatives…”
     
    For many, there aren’t alternatives that are open to them. Most people whose insurance gives them access to walk-in service, same day appointments, or urgent care clinics use those options unless a genuine emergency arises. Someone without insurance does not have access to anything but the emergency room in many cases. I use a sliding scale health clinic that sees insured and uninsured patients and does a good job of providing affordable service for the uninsured. I’m very happy with the service I get.
     
    But such places are not available everywhere, to everyone.
     
    I wonder, sometimes, if I am the only person who teeters on the edge of a serious fit of temper when I see the words ‘personal responsibility’ beaten into the ground once again as a reason why individuals have no responsibility to their society and vice versa. Personal responsibility is very important, everyone should strive to do the best they can for themselves. But individual responsibility is not an excuse to forget about social responsibility.
     
    Tort reform and comparative effectiveness studies are not going to lower the price of medical care to the level necessary to cover those who flip our burgers or bring our coffee to our tables. Nor are they going to force law and order on a private insurance market guilty of criminal malfeasance on a massive level.
     
    “Malpractice reform has been touted in the past 3 decades many times with no movement. That is a change that probably not happen as most politicos are lawyers.”
     
    An even more signficant reason is that no tort reform legislation has yet been offered that would leave consumer protections intact. Quite a few proposals to do away with such protections entirely have been proposed, but this is hardly the solution. One doesn’t have to be a lawyer to understand that without meaningful protections, tort reform is simply institutionally justifying abuses.
     

  3. 3
    Ron Chusid says:

    There are problems with both the ER being used because there are no alternatives as well as people with insurance using the ER inappropriately.

    If there were the votes for tort reform it wouldn’t be difficult to come up with a system which provides consumer protection, especially the poor correlation between malpractice suits and actual medical errors.

  4. 4
    Loughborough Accomm says:

    » The Congressional Budget Office And Cost Savings Liberal Values http://bit.ly/D4unC

  5. 5
    Martin Lewis says:

    » The Congressional Budget Office And Cost Savings Liberal Values: In analyzing initiatives meant to save money,.. http://bit.ly/HmIGx

  6. 6
    money save says:

    » The Congressional Budget Office And Cost Savings Liberal Values: In analyzing initiatives meant to save money,.. http://bit.ly/HmIGx

  7. 7
    Lough-Accomm says:

    » The Congressional Budget Office And Cost Savings Liberal Values http://bit.ly/D4unC

  8. 8
    Eclectic Radical says:

    “If there were the votes for tort reform it wouldn’t be difficult to come up with a system which provides consumer protection, especially the poor correlation between malpractice suits and actual medical errors.”
     
    Tort reform bills are nearly always the victim of a Catch-22. Tort reform with meaningful protections will be opposed by money from HMOs and hospital corporation lobbies. Tort reform without meaningful protections will be opposed by liberals and patients’ adovacy lobbies. Tort reform will be opposed by trial lawyers, across the board, unless it includes something for them.
     
    The problem is that most of the people who want tort reform don’t want meaningful protections, because they are serving the interests of health insurance and health care corporations that wish protection from liability rather than genuine ‘reform.’
     
    I’d say that the votes for tort reform would be there if meaningful protections were included in the bill and the people pushing tort reform in Congress could be persuaded to vote for a bill containing such protections.
     
    I sincerely believe that if tort reform passed first, without such protections, the votes for such protections would not be there.
     
     

  9. 9
    Ron Chusid says:

    It would be necessary to replace the current system in a single step to both solve the current problems with malpractice suits and to provide protection.

  10. 10
    Eclectic Radical says:

    Which is, I think, the big bar to it happening anytime soon. Most people advocating tort reform in most areas of life are not interested in consumer protections of any kind, they are focused on protecting business (especially insurance companies of various kinds) from liability. It’s not really in their interest to include consumer protections in such reform.

3 Trackbacks

Leave a comment