Charles Krauthammer is a doctor, the kind of doctor an insurance company would love:
How can that be? If you prevent somebody from getting a heart attack, aren't you necessarily saving money? The fallacy here is confusing the individual with society. For the individual, catching something early generally reduces later spending for that condition. But, explains Elmendorf, we don't know in advance which patients are going to develop costly illnesses. To avert one case, "it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway." And this costs society money that would not have been spent otherwise.
Think of it this way. Assume that a screening test for disease X costs $500 and finding it early averts $10,000 of costly treatment at a later stage. Are you saving money? Well, if one in 10 of those who are screened tests positive, society is saving $5,000. But if only one in 100 would get that disease, society is shelling out $40,000 more than it would without the preventive care.
In the very abstract, of course, that's not a ridiculous claim. I think he's right to make the claim that preventive care is not the high road to lower health care costs (no one he cites seems to argue for that particular claim). He is also right to grant (as he does, a few paragraphs later) that there is a moral reason for preventive care–to limit suffering. Nonetheless, I think there are two objections one could make here.
First, the economic calculation is the very one the insurance company makes–which, if I am not mistaken, is the problem.
Second, while Krauthammer is not wrong to say that preventive care is economically different from any other medical procedure (he does have an MD after all), he's allowing you to think that preventive care means everyone gets a series of costly tests every year, no matter how irrelevant or unnecessary. He writes:
That's a hypothetical case. What's the real-life actuality? In Obamaworld, as explained by the president in his Tuesday town hall, if we pour money into primary care for diabetics instead of giving surgeons "$30,000, $40,000, $50,000" for a later amputation — a whopper that misrepresents the surgeon's fee by a factor of at least 30 — "that will save us money." Back on Earth, a rigorous study in the journal Circulation found that for cardiovascular diseases and diabetes, "if all the recommended prevention activities were applied with 100 percent success," the prevention would cost almost 10 times as much as the savings, increasing the country's total medical bill by 162 percent. That's because prevention applied to large populations is very expensive, as shown by another report Elmendorf cites, a definitive review in the New England Journal of Medicine of hundreds of studies that found that more than 80 percent of preventive measures added to medical costs.
On the cost of an amputation, I'd say the surgeon definitely does not make that, but I think Obama means the total cost–which has to be somewhere around there (but I could be mistaken).
But the "large populations" claim strikes me as odd, because not everyone will be a candidate for every preventive measure. Besides, not every preventive measure is a 500 dollar test (which seems to be the basic idea of preventive care in the CBO study):
During a press briefing Tuesday, Thorpe said “the CBO focuses on one type of prevention, which is trying to detect disease through screenings. And some of those types of disease screenings can actually reduce costs, as in the case of colorectal cancer. And a lot of it is really not designed to reduce cost, it’s designed to get people medical intervention earlier,” he said. “So the intent of disease detection is not to save money, it’s sort of a straw man.” [Sorry for the format, but the original is behind a pay wall].
Finally, he is also assuming the present (inflated) cost structure as a baseline. Some have argued recently that the cost structure and the medical practice we are the problem. Others have argued that the metric of the CBO study leaves out what really ought to be measured in the first place. While neither of these demonstrates the cost-effectiveness of preventive care–they do at least point out that we should be minimally circumspect about the CBO's study.