Challenging official health cost estimates: an alternative view that incorporates the behavioural and economic effects of policy changes.

Cost estimates of health care policy changes are extremely important. Historically, however, the US government has done a poor job in projecting the actual cost of new health care programmes. These projections have been inaccurate primarily because government forecasters use 'static' methods that fail to incorporate the change in people's behaviour as a direct result of a new policy. In contrast, 'dynamic' forecasts incorporate the behavioural effects of policy changes on individuals and the economy. Static and dynamic estimates can lead to different results for 4 areas of US health policy: (a) the Medicare Catastrophic Coverage Act; (b) mandated health benefits; (c) health insurance tax subsidies; and (d) national health insurance. Improving health care policy requires the adoption of dynamic estimation practices, periodic appraisals evaluating the accuracy of official estimates in relation to actual experience, and clear presentation of proposed policy changes and estimates to policymakers and the general public.