CBO Questions Savings From Digital Health-Care Records
See also: Projected Savings from Electronic Medical Records Called Illusory
By ANNA WILDE MATHEWS
The Wall Street Journal
May 22, 2008; Page A12
WASHINGTON — Official congressional analysts dealt a blow to the prospects for broad legislation to boost information technology in the health system by taking a skeptical view of the savings that would likely result.
In an analysis released late Tuesday, the Congressional Budget Office discounted earlier projections of large cost savings that could result from the adoption of technology such as digital health records, particularly questioning an estimate of $77 billion a year that appeared in a widely cited RAND Corp. analysis. The budget office has an important voice in such debates because of its role in calculating how much legislation will cost the federal government.
Although the CBO found the potential for savings under certain circumstances — particularly when information technology was combined with broader reforms — it found that the technology by itself was typically unlikely to generate sizable financial benefits. “By itself, it’s generally not sufficient” to reduce costs, said CBO Director Peter Orszag.
The finding is a challenge to advocates of health-information technology, who have generally argued that it will improve patient safety and achieve significant efficiencies, cutting down fast-growing health-care expenses.
The idea has won broad political support, with backers including all three remaining presidential candidates as well as a diverse group of lawmakers. The current Secretary of Health and Human Services, Michael Leavitt, has also pushed for greater use of technology in the health sector. The Bush administration’s National Coordinator for Health IT, Robert Kolodner, said in a statement that “cost savings is just one of the benefits of using health IT,” and the “magnitude of savings to be generated is yet to be determined.”
An array of interests have allied around health-information technology. Last year, the “Divided We Fail” health-restructuring alliance, backed by the Business Roundtable, the AARP and the Service Employees International Union, called for Congress to pass legislation encouraging its adoption. A number of technology companies have jumped into the field, including Microsoft Corp. and Google Inc., which are getting into the business of offering personal health records.
According to the budget office report, as of 2006, only 12% of doctors and 11% of hospitals had adopted health information technologies.
Richard Hillestad, a senior principal researcher at RAND who was an author of the think tank’s analysis, said he disagreed with the budget office’s argument that his group overstated the likely savings tied to health-information technology. Mr. Hillestad said he stood by the RAND projections, and indeed feels they may “actually be relatively conservative” because they didn’t take into account some potential benefits such as billing efficiencies.
Supporters of health-information technology said the CBO analysis shouldn’t kill the prospects for legislation, adding that it could even encourage broader efforts at reform. “It’s a strategy that has to be part of a whole,” said Karen Ignagni, chief executive of America’s Health Insurance Plans.
The CBO analysis didn’t focus on particular bills, and indeed, one piece of health-technology legislation that has a chance of passing this year is expected to be associated with Medicare savings in the office’s scoring. A bill sponsored by Democratic Sen. John Kerry of Massachusetts that would encourage digital prescription technology by initially offering Medicare payment bonuses to doctors, then later penalizing them if they failed to adopt it, may end up being part of a broader Medicare package that is expected to pass before July 1. The CBO analysis noted that there might be some savings if the federal government decides to mandate some form of technology, such as e-prescribing, by penalizing providers that don’t participate.
Another bill, sponsored in the Senate by Edward Kennedy, the Massachusetts Democrat, and Michael Enzi, the Wyoming Republican, would encourage broader use of technology in health care, but not mandate it. Sen. Enzi, in a statement, said “We can squabble over the potential amount of savings, but we know health IT will save lives and money. The time to act is now.”
Write to Anna Wilde Mathews at anna.mathews@wsj.com