Treatments Of 'Dubious' Value Drive Up Health Care Costs

Armen Hareyan's picture

Health Care Costs

Health care spending will consume about half of the U.S. economy in75 years if nothing is done to curb growing costs, according to a Congressional Budget Office report released on Tuesday, Reuters reports (Kenen, Reuters, 11/13).

Thereport states that Medicare and Medicaid spending combined will grow to19% of the gross domestic product in 75 years. The two programs nowaccount for 4% of GDP. The report also estimates that Medicare spendingwill be 50% higher by 2082 than a projection released in April byMedicare trustees (Reichard, CQ HealthBeat, 11/13).

CBODirector Peter Orszag on Tuesday said that policymakers are focusing onthe wrong issue by weighing the effects of the aging baby boomgeneration on health care costs rather than looking into treatmenteffectiveness and quality.


"The nature of the long-term fiscalproblem has been misdiagnosed," Orszag said, adding that the agingpopulation "is not by any means the main factor" behind the projectedrise in cost growth. He noted that many new medical treatments andtests are "of dubious value." He said that in their efforts to stem thegrowth of health care costs, Congress and federal policymakers need topromote cost effectiveness and "evidence-based" medicine (Reuters, 11/13).

Orszagsaid that excess health care cost growth will account for 90% of thegrowth in Medicare and Medicaid spending by 2082, whereas the agingpopulation will account for 10% (CQ HealthBeat, 11/13).Orszag said that some CBO health care analysts believe health carespending could be halved without damaging quality and outcomes, whileother analysts have cited lower figures. He said that reducing spendingby 30% through changed health care policies would be nearly impossibleto achieve but would be a worthy goal.

Orszag said that thereis a "significant opportunity to remove costs from the system withoutharming health outcomes," pointing to "comparative effectiveness"research as a key element. He noted that a 30% reduction in health carecosts would account for 5% of GDP -- a "very substantial amount ofmoney" (Johnson, CongressDaily, 11/13).

Next Steps

Orszag announced that CBO will begin releasing long-term budgetprojections that include health care spending estimates annuallyinstead of biannually. He also said the office will be hiring 20 to 25additional health analysts during this fiscal year, strengthening thecurrent team of about 35. In the next few months, CBO will releaseother reports that show "levers and options" to curb rising healthcosts, Orszag said (CQ HealthBeat, 11/13).

Senate Finance CommitteeChair Max Baucus (D-Mont.) in a statement released on Tuesday said,"Finding ways to make the health care system more efficient andcost-effective will reduce costs for all health care users, private andpublic, and that will pave the way toward getting federal spendingtruly under control. The Finance Committee will dedicate a great amountof time next year toward finding real solutions." He added that inJanuary 2008, he will announce a series of hearings on health carecosts and reforming the system (CQ HealthBeat, 11/13).

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