Is the New Study on Prevention Good or Bad News for Obama Care?

Readers of the Post probably thought that a new study in Health Affairs undermined the case for preventative measures leading to cost savings. After all the headline of the article on the study is: "study raises questions about cost savings from preventive care." In fact, the article actually found that, with Type 2 diabetes, preventative measures are more cost-effective than some analysts have realized, if a 25 year window is used rather than the standard 10-year budget window used by the Congressional Budget Office. Evaluating the effect of moving to a 25-year horizon the study notes: "the cost offsets in the ten-year window are proportionately smaller than those in the twenty-five year window." While the Post highlights that the fact that for all but one age group, the net cost of preventive measures is still positive, it fails to mentions that the study is quite explicitly focused only on direct health care spending. It does not consider the impact of preventive measures on Social Security disability payments or on tax collections. Since the study finds that the vast majority of the cost of preventative measures are recovered through direct savings on health care spending, it would require only modest effects on disability and employment to make the net impact of these measures on the budget positive.

--Dean Baker