Is the cure worse than the disease?

There appears to be consensus for the notion that, absent change of some sort, U.S. health care costs will continue to rise. A recent study conducted by Buck Consultants confirms the trends.


Costs for the most popular types of health care coverage are projected to increase at double-digit rates through the remainder of 2009 and into 2010, according to the National Health Care Trend Survey, the 20th such survey of health care insurers and administrators conducted by the consulting firm.


"Although our survey reveals a slight decrease in cost trends since our prior study, there are signs that we’re going into another cycle of high trends," said Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey. "Health insurers may increase costs in light of the continuing economic downturn and legislation such as mental health parity and the recent expansion of COBRA."


So, if health care costs will continue to rise if the status quo is maintained, then, as we've discussed before, the Obama Administration's choice to position its health care reform proposals in part as a way to control costs makes sense--unless, of course, a case can be made by reform detractors that the reform proposals themselves will cost "too much." Support for reform may wane if voters grow concerned that the cure may be worse than the disease.

Thus, some Congressional Democrats are described as wary of the cost estimates of health care reform expected to be released this week by the Congressional Budget Office. Why? According to The Hill, the CBO doesn't like to "count" savings achieved by preventive measures (e.g., preventive health care methods) when creating cost estimates. This reluctance isn't specific to health care issues, apparently; CBO is reluctant to include data it deems to be "anecdotal" when creating budget estimates. (That said, others also question the efficacy of prevention methods as a significant driver of health care cost savings.)

Of course, increased cost savings is just one component of the broad package of cost controls and increased revenues discussed by President Obama to pay for health care reform. So, keep an eye out this week for the reaction to the CBO's efforts to diagnose the cost of reform.