demonstration project in the North Carolina Medicaid program reported savings of 11 percent per member per month (Mercer Human Resources Consulting, 2007), and preliminary findings from a trial in the Geisinger Health System indicate that medical homes led to a 7 percent savings (Paulus et al., 2008). However, it is uncertain whether similar savings could be achieved if medical homes were widely adopted by public programs, such as Medicare. Medical homes also do not address the larger issue of the growing deficiency in the number of primary-care physicians.

Caveats Regarding Savings from Reform

A major objective of health system reform is the more efficient use of resources—but efficient use might not yield federal budget savings. Policies that increase the efficiency of health care delivery might promote the wider use of more effective but more expensive treatments, improving health outcomes without reducing spending. For example, the identification of better treatments through comparative effectiveness research might result in an increase in the number of patients treated—and, therefore, in higher costs.20 Any savings that result from comparative effectiveness research, moreover, would occur well after the research was funded because of the long lead time required to produce treatment recommendations and for the medical community to put those recommendations into practice.

In a similar vein, better health information technology may increase health spending by identifying people who need treatment but are not currently receiving it. Substantial savings through various applications of technology are possible only if medical practice becomes dramatically more efficient. Health information technology might promote such a change (albeit with attendant adjustment costs for providers), but by itself would not necessarily create such savings.

Preventive medical care (which includes things such as immunizations and screening tests) also may not be the most promising place to look for significant systemwide cost savings. Most preventive medical care improves health outcomes but increases costs (Cohen et al., 2008; Russell, 2007, 2009). Typically, preventive care must be offered to a relatively large group of people of whom only a small fraction will directly benefit through an averted illness (Cohen et al., 2008).


The difficulty of establishing a fiscally sustainable long-term growth curve for federal health spending can hardly be overstated. The reform challenge is complicated by the need to balance cost containment with other important objectives. Virtually any plan to expand access will require ad-

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