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Payoff from 'What Works' Provision May Be Ten Years After

By John Reichard, CQ HealthBeat Editor

September 10, 2007 – Research on "what works" in medicine is one of the few bright spots in the otherwise bleak array of choices for controlling health costs, according to Congressional Budget Office Director Peter R. Orszag. But legislative provisions in the children's health insurance bill that would promote that research would actually cost the federal government more money than it saved in the decade after its enactment, according to a CBO scoring document released last week.

Contained in a measure (HR 3162) reauthorizing the State Children's Health Insurance Program and blocking cuts in Medicare payments to doctors, the CBO estimated that the House-passed provisions funding a center to compare the effectiveness of various medical treatments and procedures would cost the federal government $600 million over five years and $2.4 billion over 10 years. At the same time, the research produced by the center would reduce federal health spending—primarily in the Medicare, Medicaid, and the Federal Employees Health Benefit Programs—by about $100 million over five years and $1.3 billion over ten years.

Consequently, those provisions would increase direct federal spending by half a billion dollars over five years and by $1.1 billion over ten years, the CBO estimated.

However, research findings generated by the provisions would produce overall savings if spending by the private sector on health care is included, Orszag said in a Sept. 5 letter to House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif. Total spending by public and private purchasers on health care would be reduced about $6 billion over 10 years, yielding a savings of several billion dollars, after netting out the $2.4 billion in federal costs.

That's a puny amount of savings compared to the health outlays that must be reduced to make a significant dent on the long-term costs of running public and private health programs. "Getting to the point where additional research on comparative effectiveness could have a significant impact on health spending would probably take many years," Orszag wrote. "In addition to the time required to get such research under way, a lag would exist before results were generated—particularly if they depended upon new clinical trials."

Orszag added that "initially, the available results would probably address a relatively small number of medical treatments and procedures; more time would have to elapse before a substantial body of results was amassed," he said. "And in areas of medicine that involved significant amounts of spending, several studies might be needed before a consensus emerged about the appropriate conclusions to be drawn—even if those studies did not generate conflicting results."

However, despite the time it would take to generate a payoff, the CBO director has repeatedly suggested that such research is one of the keys to assuring the long-term financial viability of the Medicare and Medicaid programs without undermining patient care. The premise of the research is that a variety of treatments exist for high-cost conditions and that considerable savings may be generated by identifying the most effective approach. If what works best in fact does cost less, health costs can be cut while boosting quality at the same time, proponents of the research say.

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