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Number Based on Shaky Assumptions

Wednesday, October 8, 2008

"We're going to work with your employer to lower the cost of your premiums by up to $2,500 a year."

-- Barack Obama, presidential debate

Sen. Barack Obama said last night that he would cut health-care insurance premiums by as much as $2,500 a year by investing in prevention and improving electronic health records. He has made this assertion repeatedly on the campaign trail, but it has been greeted with skepticism by independent experts.

THE FACTS

The Obama campaign has seized on a 2005 Rand Corp. study, which estimated that the nationwide adoption of paperless health records would result in savings of $77 billion. But the shift toward electronic records has been underway for some years without any cuts in health-care premiums. Furthermore, the Rand study estimated that the process will not be complete until 2019, two years after the end of a potential second Obama presidential term.

The Rand study has been criticized by the Congressional Budget Office, which argues that it is based on an artificially high adoption rate of 90 percent that is unlikely over the next decade. The shift to a fully computerized system of medical records would require large investments in technology that are beyond the reach of small and medium-size medical practices.

Obama has said that his health-care reform proposals will result in overall savings of about $200 billion a year, a figure that includes the $77 billion in information technology savings. According to the Obama campaign, improving prevention programs would result in savings of an additional $80 billion a year.

THE PINOCCHIO TEST

Even if the changes proposed by Obama resulted in significant savings for doctors and health insurance companies, there is no guarantee that the savings would be passed on to consumers. The promised $2,500 cut in health premiums is a best-case scenario based on assumptions that are very questionable.

TWO PINOCCHIOS: Significant omissions or exaggerations.

-- Michael Dobbs

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