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CBO Examines Cost of Health Policy Changes


 

The CBO reports are available online at www.cbo.gov

A health reform plan that calls for either subsidies of health insurance premiums or mandates alone would not result in universal coverage, according to an analysis from the Congressional Budget Office.

Lawmakers, however, could achieve near-universal coverage by combining those policies or implementing them with strategies that simplify the enrollment process, the CBO analysts wrote in one of two reports on health care released last month.

The CBO, created by Congress in the 1970s, provides legislators with objective, nonpartisan analyses to assist with economic and budgetary decisions regarding federal programs, according to the agency's Web site.

One option outlined by the CBO would be to enact an enforceable individual mandate accompanied by subsidies for low-income people. Another possible combination would be to have a voluntary health insurance system with significant government subsidies and a system that facilitates enrollment, similar to how seniors are enrolled in Medicare.

In “Key Issues in Analyzing Major Health Insurance Proposals,” the CBO analysts provide an overview of the major issues they will consider in analyzing health reform proposals. In a second report, “Budget Options, Volume I: Health Care,” they outline 115 specific health policy options and their costs or potential for savings. The options examined range from the establishment of association health plans to the limitation of awards from medical malpractice lawsuits.

The reports address some of the common elements from the major health reform proposals, but do not analyze any particular package. The CBO's projections are being closely watched as members of Congress prepare to consider significant changes to the U.S. health care system.

As part of this effort, the CBO also analyzed some commonly proposed approaches to reduce costs and improve the quality of health care. These include reducing rates of obesity and smoking, expanding the use of preventive medical care, adopting disease management programs, funding comparative effectiveness research, expanding the use of health information technology, and establishing a medical home for health plan enrollees.

While these ideas could improve quality and health, the evidence is unclear about their impact on overall federal spending, the CBO wrote.

For example, in the case of health information technology, as more physicians and hospitals adopt electronic medical records under current law, it becomes less cost effective to offer subsidy payments for adoption.

If a system of subsidies is established in the future, then the government would incur additional costs but might not significantly improve adoption rates over current levels, a phenomenon known as “buying out the base,” according to the CBO.

The impact of the medical home on health care spending is also unclear, according to the CBO analysis. The use of a medical home to coordinate care might help reduce costs if the primary care physician who was coordinating care had a financial incentive to limit the use of specialty care. However, the medical home could also result in a greater use of services and therefore increase costs, the CBO wrote.

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