One bipartisan idea to fix U.S. health care is to save money by catching ailments early-an approach economists reject as a misconception that’s clouding the debate.

By Catherine Dodge
Bloomberg Markets, November 2009

One assertion comes from both Democrats and Republicans as they contemplate changes to the U.S. health system: Prevention saves money. America’s most-expensive-in-the-world medical tab can be cut by paying for the services that detect illnesses early and keep a person healthy instead of the costly procedures that are needed when ailments go untreated, the politicians say.

President Barack Obama said in his Sept. 9 speech to Congress that he would require insurers to pay for screenings for breast cancer and colon cancer because they save lives -- and money. Mitch McConnell, the top Republican in the Senate, put it this way on CNN in July: “Everybody’s excited about prevention.” In a speech in Washington, Republican National Committee Chairman Michael Steele called efforts to prevent disease and encourage healthy living “bipartisan” and said they would cut expenses.

Economists and policy analysts who study the issue have a different message: Sorry, it doesn’t work that way.

“Most politicians all along the political spectrum have said we’ll save money by giving preventive care, and I don’t think that’s ever been shown to work,” says Uwe Reinhardt, an economics and public affairs professor at Princeton University in New Jersey.

Reinhardt, who has advised Congress on how to cut health- care costs, and Victor Fuchs, a health-care economist at Stanford University in California, both say the expense of more tests for more healthy people exceeds the savings generated by early treatment of the cases caught.

Early Intervention

Early intervention is desirable, they say, since no one wants to neglect a treatable disease. It just won’t cure the chronic condition of rising health-care costs.

Fuchs co-wrote a report on how to achieve universal health coverage with Zeke Emanuel, a White House health policy adviser and the brother of Obama’s chief of staff, Rahm Emanuel. Fuchs explains the attraction of preventive care this way: “What people imagine is, you’re going to screen early, and you’re going to find somebody who has the disease at an earlier stage where it’s going to be cheaper to treat. What they don’t realize is how many people you have to screen to find that one case.”

Lawmakers are searching fervently for ways to rein in U.S. health-care costs, with some claiming that pending legislation will bust the federal budget and others arguing that the status quo will bankrupt the country. The complexities of prevention show how difficult a task policy makers face.

Smoking Cessation

Preventive care goes beyond early detection of disease. Encouraging healthier lifestyles with smoking-cessation counseling or exercise programs is also cited as a possible money saver. Senator McConnell, in his comments in July, praised the grocery store chain Safeway Inc., which rewards employees for not smoking or for maintaining a healthy weight.

Analysts at the Congressional Budget Office, the nonpartisan arm of Congress charged with estimating the costs of legislative proposals, say that wellness programs may help control health-care spending. They also caution that research on that topic is scant. Studies are more conclusive on services such as cancer screening and cholesterol management, and most of the time they raise medical spending overall, the CBO says.

Designing government policies to induce healthier behavior could be tricky, says Douglas Elmendorf, director of the budget office. “Even successful efforts might take many years to bear fruit and could involve significant costs,” he wrote in August on the agency’s Web site. He also said that government efforts might duplicate wellness programs that some workplaces already offer, shifting expenses to the government unnecessarily.

Most Expensive

Overall, the money Americans pay for health insurance, hospital bills, drug prescriptions and government programs such as Medicare for retirees was 16 percent of gross domestic product in 2007, and it’s climbing. The European countries with the most-expensive care spend about 11 percent of GDP, according to data from the Organization for Economic Cooperation and Development.

Unchecked, the U.S. health system will make up almost a third of the economy by 2035 and will put government spending on an unsustainable path, the budget office estimates.

An article in the New England Journal of Medicine in February 2008 tried to tease out fact from fiction in the discussion of preventive care. The authors examined 599 peer- reviewed studies that measured the cost-effectiveness of specific preventive measures.

Colon cancer screening saved money when it targeted men ages 60 to 64, the authors reported, as did flu vaccinations for toddlers. Intensive anti-tobacco programs for seventh and eighth graders did not. Diabetes screening for all 65-year-olds, as opposed to just those with high blood pressure, did not save money.

“Overreaching”

The report concluded that preventive care will sometimes cut health-care expenses, mostly when targeted to narrow, high- risk populations. “Sweeping statements about the cost-saving potential of prevention, however, are overreaching,” the authors wrote.

The search for the right policy to tame U.S. health-care spending -- whether for prevention or treatment -- is up against a hard-to-resist trend, says Paul Ginsburg, president of the Center for Studying Health System Change in Washington. Doctors and hospitals, drug companies and device makers keep coming up with new and more-expensive treatments, says Ginsburg, whose group runs one of the largest multiyear studies of U.S. care. That means it’s vital to choose the most-cost-effective medicines and procedures.

As the misconceptions surrounding preventive care show, making such choices is never easy. While an ounce of prevention may be worth a pound of cure, that doesn’t necessarily mean it saves money.

Catherine Dodge is a Bloomberg News reporter in Washington at cdodge1@bloomberg.net

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