More Thoughts on Obama's Health Care "Savings"

From CBO Testimony to Congress on Controlling Savings:

Health information technology has the potential to significantly increase the effi­ciency of the health sector by helping providers manage information. In particular, electronic health records—comprising electronic documentation of providers’ medical notes, electronic viewing of laboratory and radiological results, electronic prescribing of medications, and an interoperable connection among providers of health care—could have a significant impact on medical practice.¹⁵ When used effectively, electronic health records could reduce the duplication of diagnostic tests; remind physicians about appropriate preventive care; identify harmful drug inter­actions or possible allergic reactions to prescribed medicines; and help physicians manage the care of patients with complex chronic conditions. Such steps could yield significant health benefits for patients, but research indicates that the extent to which health IT also generates reductions in health care spending depends largely on the incentives facing providers who have adopted it. By itself, the adoption of more health IT is generally not sufficient to produce substantial savings because the incentives for many providers to use that technology in ways that control costs are not strong.

The other day the president using his usual smoke and mirrors claimed trillions in savings with the aid of the health care industry, a claim the health care industry immediately refuted. Obama is using mythical savings as a selling point to paper over the fiscal disaster his plans are going to have. He knows massive tax increases will be needed but wants people to think this will be as painless as possible. Get the legislation passed, then give the actual bill.


From the CBO Blog:

Despite broad support among analysts for moving in these directions, there is substantial uncertainty about the effects of many specific policies. In particular, many policies in these areas might not yield substantial savings within a 10-year window. There are a number of reasons for this. In some cases, savings materialize slowly over time because an initiative is phased in. In other cases, initiatives that will generate savings—such as prevention efforts or disease management—have substantial costs to implement. In some cases, initiatives cause reductions in national health spending that the federal budget does not capture. In yet other cases, new structures for health care delivery improve health but do not provide incentives to reduce costs. And in other cases, limited evidence about effects on efficiency is available.

The President is being disingenuous.