Health Reform WK-EDGE CBO finds that preventive medical services generally increase healthcare costs
Wednesday, June 24, 2020

CBO finds that preventive medical services generally increase healthcare costs

By Robert B. Barnett Jr., J.D.

The CBO analysis, however, does not capture the benefit of these services to people’s health.

Preventive medical services have generally led to higher healthcare costs, according to a Congressional Budget Office (CBO) report explaining how it measures the expansion of preventive medical services on federal budget proposals. Because preventive medical services also improve people’s health, the report notes, the higher costs may be deemed a worthwhile expenditure. Of note, the CBO would be unlikely to address the full impact of a possible COVID-19 vaccine, which the report acknowledged could have "major macroeconomic effects," because its scope it limited to the impact on the federal budget (CBO Report, June 15, 2020).

Preventive services background. The use of preventive medical services varies widely by age and type of service. For example, vaccinations are more common for children. In terms of screenings, the report said, "use of recommended services for people of all ages is low." Millions of infants, children, and adolescents do not receive the recommended screenings. According to the report, only 1 in 4 adults between the ages of 50 and 64 are up to date on recommended preventive medical services, such as for colorectal cancer, hypertension, and high blood sugar. Less than half of adults over the age of 65 are up to date on recommended preventive medical services.

ACA/Medicaid/Medicare. When people have health insurance for a specific preventive medical service, they tend to use it. The Affordable Care Act (ACA), for example, includes provisions that expanded insurance coverage for preventive medical services by eliminating out-of-pocket costs. The evidence shows that people use fewer preventive medical services when they bear some of the costs. The ACA mandated that private health plans cover four types of preventive medical services: (1) services with a grade of A or B from the U.S. Preventive Services Task Force (USPSTE); (2) immunizations recommended by the Advisory Committee on Immunization Practices (ACIP); (3) services recommended for infants, children, and adolescents by Bright Futures; and (4) services for women recommended in the Women’s Preventive Services Guidelines.

Coverage for Medicaid recipients depends on how they qualify for the program. Those eligible through the ACA can access the services without cost-sharing. Otherwise, the states have the option of covering preventive medical services for adults. The federal government offers an incentive for states to cover the services. CHIP recipients receive coverage of preventive medical services, whose coverage extent depends upon whether the state operates CHIP as an extension of Medicaid or separately. Coverage for Medicare is mixed. Certain screenings are offered without cost sharing but others are covered only when they are provided by certain providers in certain settings. Some vaccines have cost-sharing requirements as part of Part D. An annual wellness visit, which includes a schedule of preventive services, is covered.

Effect on spending. Preventive medical services have been found to decrease or increase overall healthcare spending, depending on the circumstances. One review found that about 20 percent of the services reduced healthcare spending. The effect is determined by the characteristics of the service, the nature of the disease, and the characteristics of the population that receives it. The costs of screenings, for example, include not only the initial screening but also the treatment of any adverse reactions, the cost of follow-up testing and treatment for those who test positive, and the treatment of unrelated conditions among those whose longevity has increased as a result of the screening.

Policies to expand coverage. When the CBO examines the likely effects on the federal budget of policies to expand preventive medical services, it does so over a 10-year period. When asked to do so, it implements a three-step process: (1) identify the population affected; (2) estimate the costs of the preventive services; and (3) estimate the budgetary effects, including the effects on federal outlays and revenues. The CBO is often asked why preventive health services do not show savings. It offers the following reasons: (1) the cost of paying for many people exceeds the cost savings to a small subset who avoided the disease because of the service; (2) preventive medical services sometimes have unintended costs from adverse effects; (3) the savings may accrue to state and local governments, to private plans, or to individuals rather than to the federal government, which subsidizes such a large portion of the costs; (4) some people may already be getting the preventive services, so the costs would increase without any savings; and (5) savings may not emerge within the 10-year window.

Coronavirus vaccine. The CBO acknowledged that a possible coronavirus vaccine would have "significant effects on the federal budget." However, the report said, "much uncertainty surrounds those effects," including the timing of the vaccine approval, its broad availability, the vaccine’s effectiveness, and the state of the economy at the time of the vaccine. The significant budgetary impact on broad economic changes, however, would not be included in CBO cost estimates because (1) by long-standing practice, the CBO’s estimates do not reflect changes that would affect total economic output and (2) to the extent that appropriations related to the vaccine would affect mandatory spending and revenues, those effects would not be treated as offsets under scorekeeping guidelines that Congress had adopted. In any event, the CBO lacks sufficient information to estimate the costs related to the vaccine, including, of course, the cost of the vaccine itself to patients.

CBO approach. The CBO scoring approach focused on the effect on the federal budget over a 10-year period. As a result, it is not as comprehensive as other possible approaches, such as a cost-benefit analysis or a cost-effectiveness analysis. Those other approaches, for example, require assigning values to the benefits of preventive medical services, a comparison that the CBO does not undertake.

ReportsLetters: CBOReports AccessNews AgencyNews MedicaidNews MedicarePartBNews PhysicianNews PreventiveCareNews Covid19

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