Experts Offer CBO New Formula for Determining Cost of Reform

By Lori Montgomery

As key lawmakers begin drafting health reform legislation, health advocates are nervously wondering whether the numbers will add up in the eyes of the Congressional Budget Office, the official arbiter of legislative costs and savings. Today, a new paper offers a way to put a thumb on the CBO scale without sacrificing that agency's reputation for analytical rigor.

Health policy consultants Michael O'Grady, a senior fellow at the National Opinion Research Center at the University of Chicago, and James Capretta, a fellow at the Ethics and Public Policy Center, argue that congressional budget analysts should add data from epidemiological studies on chronic diseases to the mix of data they consider when calculating the costs of various health policies. They maintain that diabetes is the "the best candidate" for inclusion, because the natural history of the disease, its complications and its response to treatment have been well documented over many decades by objective researchers at the National Institutes for Health and the Centers for Disease Control, among others.

The data show that an intensive treatment protocol that heads off complications such as blindness and kidney failure through frequent testing can reduce costs per person by more than $2,000 a year after 20 years, the report says. By factoring in those savings -- and extending cost estimates for legislation beyond the traditional 10-year window -- CBO could find that improving treatment for chronic illness is actually much less expensive than it would otherwise appear, the authors argue.

It's no free lunch, however. After presenting the paper at a breakfast hosted by the Partnership to Fight Chronic Disease, Grady and Capretta said the savings achieved by improving treatment for diabetes is unlikely ever to cover the full cost of the additional testing and procedures. As a means to help cover the cost of overall health reform, Grady said, "it's useless."