Wide variations in what Medicare pays for medical procedures and a lack of clinical evidence of what works best represent a more critical threat to long-term healthcare budgeting than a rapidly aging population and the coming tide of baby boomers, according to a new report by federal economists.
The nonpartisan Congressional Budget Office, in its first-ever breakout of long-term spending on healthcare, said that even though the aging population has been frequently cited as the No. 1 reason for increased federal spending on Medicare and Medicaid, the more dire threat is the rising cost of healthcare.
Another cost driver is the wide disparity between what Medicare pays for in one part of the country versus another. The costs often vary even though the outcomes are the same. CBO Director Peter Orszag urged expanding comparative-effectiveness research. Instead of comparing one drug with a placebo, for instance, clinical researchers should compare one drug with another, or one medical procedure with another. Tying that research back to financial incentives is one route to lower long-term spending on healthcare, he said.
The report is aimed at giving policymakers a better analysis of healthcare spending trends. With total spending on healthcare at 16% of gross domestic product, Its striking that we do so little to evaluate what were getting in return for it, he said. -- by Matthew DoBias
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