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Politicians’ Health Misstatements

By July 21, 2009November 2nd, 2009Commentary

Following the Congressional Budget Office’s latest missive finding that proposed health reform legislation would increase federal deficits over time, several politicians complained that the CBO was not scoring the legislation properly.  (WSJ Article)  Many of the complaints center on an alleged failure of the CBO to recognize all the savings that will accrue apparently just from enacting reform, particularly in the area of preventive care.  Research, however, has not found that preventive and wellness care necessarily provide any significant cost savings, although they likely improve health.  The CBO has repeatedly explained its reluctance to credit savings to prevention and wellness in its various health publications.  Given the history of health coverage expansions, and given the failure of any of the proposed legislation to significantly modify provider payments, we should be more concerned about the legislation costing more than the CBO estimates rather than less.  And members of Congress should be aware of basic research before they speak and should be fully honest with the public about the difficulties of obtaining cost savings, given the importance of the topic.

The President has had his own lapses.  In a recent NBC interview, in regard to an individual mandate, he stated that “a lot of the uninsured are relatively young people who can be insured fairly cheaply–that that actually will drive down the costs for everybody.”  (NBC Clip)  It is hard to tell from the interview exactly what the President’s reasoning was, but what he said is not fully accurate.  It is true that younger people tend to use fewer health services and therefore if they were paying an experience-based premium, they would pay less.  But it is hard to see how that translates into everybody paying less.  The only way that would occur if is young people without insurance accounted for much of the uncompensated care being provided, but other research has shown that this is not the case.  What is more likely is that forcing younger people to buy insurance will, in the absence of other reforms, cost more.  Most young people would end up paying more in premiums than they currently pay in health care, partly because generally once people get insurance they utilize more health care and partly because there are administrative costs involved in providing insurance.  And if premiums are community rated, costs would be shifted to younger people and they definitely won’t be paying less.  If more people have coverage, our total health care bill will be higher, unless there are other reforms to constrain spending.   That is why finding cost savings should be the first priority.

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