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Health Care

Growth in spending on health care programs is one of the central fiscal challenges facing the federal government. Health care spending per person has grown faster than the nation's economic output per person by about 1 1/2 percentage points per year, on average, for the past few decades. This rapid growth poses a challenge for federal health care programs like Medicare and Medicaid, and also for state and local governments and for the private sector. CBO devotes a large share of its resources to studying proposals that would make narrow or broad changes in the nation's systems for delivering and financing health care.

Sub-Topics:

  • Medicare
  • Medicaid and CHIP
  • Affordable Care Act
  • Private Health Insurance
  • Public Health and Preparedness
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H.R. 3630, Middle Class Tax Relief and Jobs Creation Act of 2012

cost estimate

February 16, 2012

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Highway Investment, Job Creation, and Economic Growth Act of 2012

cost estimate

February 14, 2012

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monthly archive

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Treatment of PTSD and Traumatic Brain Injury by the Veterans Health Administration

blog post

February 10, 2012


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The Veterans Health Administration's Treatment of PTSD and Traumatic Brain Injury Among Recent Combat Veterans

report

February 9, 2012

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Highlights

Through September 2011, about 740,000 veterans from overseas contingency operations in Iraq and Afghanistan had been treated by the Veterans Health Administration (VHA). That number is slightly more than half of all recent veterans eligible for care by VHA.

Average Costs for All of VHA's Health Care Provided to OCO Patients VHA spent about $2 billion in fiscal year 2010 to provide medical care to all recent combat veterans.

One in Four Recent Combat Veterans Treated at VHA from 2004 to 2009 Had a Diagnosis of PTSD; 7 Percent Had a Diagnosis of TBI

Using data for recent veterans treated by VHA from 2004 to 2009, CBO found that:

  • 21 percent were diagnosed with post-traumatic stress disorder (PTSD) but not traumatic brain injury (TBI),
  • 2 percent were diagnosed with TBI but not PTSD,
  • An additional 5 percent had both PTSD and TBI, and
  • The remaining 72 percent had neither diagnosis.

Treating Recent Combat Veterans Diagnosed with PTSD, TBI, or Both Was Much More Expensive Than Treating Other Recent Veterans

 Average Costs for
First Year of Treatment
Recent Veterans 
    With PTSD$8,300
    With TBI$11,700
    With PTSD and TBI$13,800
  
Recent Veterans with Neither Condition$2,400

Service Members Deployed to Iraq and AfghanistanThose amounts do not include initial care provided by the Department of Defense (DoD) or care by other providers outside of VHA. For comparison, VHA estimates that the average cost of care in 2011 for veterans of all eras will be $9,100.

VHA’s average costs for patients were highest during the first year of their care and declined and then stabilized in subsequent years. In the data CBO analyzed, VHA’s average costs for patients with TBI (including those with both TBI and PTSD) appear to increase in the third and fourth years. That result is probably generated by a policy change (occurring in the middle of the period CBO analyzed) related to screening for mild TBI. Without that change, costs for those patients would probably also have been highest during the first year of care and declined and stabilized thereafter.

Those results exclude about 500 patients with severe multiple injuries that received treatment in VHA's polytrauma centers; costs for those patients were significantly higher.

VHA’s Experience May Not Reflect the Rates of (or the Costs of Treating) PTSD or TBI in the Overall Population of Recent Combat Veterans

CBO’s study examines data from veterans who sought treatment at VHA. Those data may not be representative of the overall population of recent veterans. A great deal of uncertainty surrounds the prevalence of PTSD and TBI within the population that deployed to Iraq and Afghanistan.

Other researchers have estimated that:

  • Between 5 percent and 25 percent of those deployed to Iraq and Afghanistan may have PTSD when screened for the disorder after returning from deployment, and
  • Between 15 percent and 23 percent have experienced a TBI (the vast majority of which are mild TBIs, also known as concussions), though the proportion still symptomatic when screened after returning to the United States is much lower—between 4 percent and 9 percent—because most mild TBIs get better within a few months.


Offsetting Effects of Prescription Drug Use on Medicare’s Spending for Medical Services

Nov 2012 - CBO estimates that greater use of prescription drugs by Medicare beneficiaries reduces Medicare’s spending on medical services.

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related publications


  • Lessons from Medicare's Demonstration Projects on Disease Management and Care Coordination

    January 18, 2012

  • Lessons from Medicare's Demonstration Projects on Value-Based Payment

    January 18, 2012
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Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

report

January 18, 2012

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Highlights

In the past two decades, Medicare has conducted two broad categories of demonstrations aimed at enhancing the quality of health care and improving the efficiency of health care delivery in its fee-for-service program:

  • Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.
  • Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.

CBO reviewed the outcomes of 10 major demonstrations that have been evaluated by independent researchers. The evaluations show that most programs have not reduced Medicare spending. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees. Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.

Demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare’s fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers, and in the nation’s decentralized health care delivery system, which does not facilitate communication or coordination among providers. The results of those Medicare demonstrations suggest that substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients.



monthly archive

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  • December 2012 (4)
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Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

blog post

January 18, 2012


  • blog post

related publications


  • Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

    January 18, 2012

  • Lessons from Medicare's Demonstration Projects on Value-Based Payment

    January 18, 2012
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Lessons from Medicare's Demonstration Projects on Disease Management and Care Coordination

working paper

January 18, 2012

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Abstract

This paper summarizes the results of Medicare demonstrations of disease management and care coordination programs. Such programs seek to improve the health care of people who have chronic conditions or whose health care is expected to be particularly costly, and they seek to reduce the costs of providing health care to those people. In six major demonstrations over the past decade, Medicare’s administrators have paid 34 programs to provide disease management or care coordination services to beneficiaries in Medicare’s fee-for-service sector. All of the programs in those demonstrations sought to reduce hospital admissions by maintaining or improving beneficiaries’ health, and that reduction was a key mechanism through which they expected to reduce Medicare expenditures. On average, the 34 programs had no effect on hospital admissions or regular Medicare expenditures (that is, expenditures before accounting for the programs’ fees). There was considerable variation in the estimated effects among programs, however. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce hospital admissions than programs without those features. After accounting for the fees that Medicare paid to the programs, however, Medicare spending was either unchanged or increased in nearly all of the programs.


  • blog post

related publications


  • Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

    January 18, 2012

  • Lessons from Medicare's Demonstration Projects on Disease Management and Care Coordination

    January 18, 2012
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Lessons from Medicare's Demonstration Projects on Value-Based Payment

working paper

January 18, 2012

read complete document  (pdf, 455 kb)

Abstract

This paper summarizes the results of Medicare demonstrations of value-based payment systems, which give providers financial incentives to improve the quality and efficiency of care. Only one of the four demonstrations for which results are available has yielded significant savings for the Medicare program. In that demonstration, Medicare made bundled payments to hospitals and physicians to cover all services connected with heart bypass surgeries, and Medicare spending for those services declined by about 10 percent. The other demonstrations appear to have resulted in little or no savings for Medicare. One, the Physician Group Practice Demonstration, allowed large multispecialty physician groups to share in estimated savings if they reduced total Medicare expenditures for their patients. Another offered hospitals bonuses if they met certain criteria regarding the quality of care. The last (for which results are available only on a preliminary basis for the first year) allowed home health agencies to share in estimated savings if they reduced total Medicare expenditures for their patients and met certain targets for quality of care.


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Implications of Rising Health Care Costs

presentation

January 13, 2012

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