Here again is the President speaking about health care in Portsmouth, New Hampshire:

THE PRESIDENT: … because there’s no reason we shouldn’t be catching diseases like breast cancer and prostate cancer on the front end. That makes sense, it saves lives; it also saves money … and we need to save money in this health care system.

Here is the key sentence from CBO Director Dr. Douglas Elmendorf in a letter he sent to Rep. Nathan Deal last Friday:

CBO: Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.

Dr. Elmendorf eloquently explains why:

CBO: But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses. To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. Even when the unit cost of a particular preventive service is low, costs can accumulate quickly when a large number of patients are treated preventively. Judging the overall effect on medical spending requires analysts to calculate not just the savings from the relatively few individuals who would avoid more expensive treatment later, but also the costs for the many who would make greater use of preventive care. As a result, preventive care can have the largest benefits relative to costs when it is targeted at people who are most likely to suffer from a particular medical problem; however, such targeting can be difficult because preventive services are generally provided to patients who have the potential to contract a given disease but have not yet shown symptoms of having it.

Finally, Dr. Elmendorf makes a key point (also on his blog):

CBO: Of course, just because a preventive service adds to total spending does not mean that it is a bad investment.

The President could have correctly said, “Preventive care saves lives. It increases spending, but I think it’s worth it.” He was incorrect when he said “It also saves money … and we need to save money in this health care system.”

Continue to the next post this series…

Other posts in this series:

  1. The President’s overpromise that everyone can keep their health plan
  2. Putting the government in charge of your health insurance
  3. Waiting in line
  4. Government-mandated benefits