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Letter to the Honorable Pete Stark 1 (September 2007)

handle is hein.congrec/cbo9302 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Peter R. Orszag, Director U.S. Congress Washington, DC 20515 September 5, 2007 Honorable Pete Stark Chairman Subcommittee on Health Committee on Ways and Means U.S. House of Representatives Washington, DC 20515 Dear Mr. Chairman: I am writing in response to your questions about how the Congressional Budget Office (CBO) evaluated the provisions regarding comparative effectiveness research that were contained in section 904 of H.R. 3162, the Children's Health and Medicare Protection Act of 2007, as reported by the Committee on Ways and Means and passed by the House of Representatives on August 1, 2007. Section 904 would create a Center for Comparative Effectiveness Research; establish a Health Care Comparative Effectiveness Research Trust Fund; impose a fee on issuers of health insurance policies and sponsors of self-insured health plans; and authorize the center to spend moneys in the trust fund for research on the comparative effectiveness of medical treatments and procedures. The information generated by that research would tend to expand the scope of available evidence about what medical treatments work best for which patients. As a result, CBO estimates, spending on health care services would be reduced, but the effect on such spending over the next 10 years would be modest. The Potential Value of Research on Comparative Effectiveness The central fiscal challenge facing the nation involves rising health care costs. Over the past four decades, costs per beneficiary in Medicare and Medicaid have increased about 2.5 percentage points faster per year than has per capita GDP. If costs per beneficiary were to continue growing that much faster than income per capita over the next four decades, federal spending on Medicare and Medicaid would rise from about 4.5 percent of gross domestic product (GDP) today to roughly 20 percent of GDP by 2050. The rate at which health care costs grow relative to income is the most important determinant of the nation' s long-term fiscal balance; it exerts a significantly larger influence on the budget over the long term than other commonly cited factors, such as the aging of the population. www.cbo.gov

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