CBO Tells Congress That Should Obamacare "Work", It'll Drive Up Costs

There is a new pro-Obamacare ad out by a group called “Americans for Stable Quality Care.” You can see the ad here.The ad asks “what does health insurance reform mean for you?” One of the points is “a focus on preventing illness before it strikes.”There’s a problem with that. According to the Congressional Budget Office, preventative care will drive up the costs of Obamacare.Doug Elmendorf, the CBO Director, responding to Congressman Nathan Deal, wrote that

Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.

Elmendorf went on to write

Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness. An article published last year in the New England Journal of Medicine provides a good summary of the available evidence on how preventive care affects costs.3 After reviewing hundreds of previous studies of preventive care, the authors report that slightly fewer than 20 percent of the services that were examined save money, while the rest add to costs.

Now, lest anyone think either Elmendorf or I am knocking preventative care, we are not. Elmendorf notes that, “just because a preventive service adds to total spending does not mean that it is a bad investment. Experts have concluded that a large fraction of preventive care adds to spending but should be deemed ‘cost-effective.’ He’s right.There’s just one problem that Elmendorf alludes to. The CBO cannot really score the run up in costs of preventative care under H.R. 3200, the Democrats’ healthcare legislation.Assuming Obamacare is successful at increasing preventative care, the program will escalate costs. Then, also as Elmendorf alludes to, the government is going to have to decide who gets preventative care and who does not, if they want to contain costs.In other words, we will get escalated unknown costs or we will get rationing, but most likely we will get both.