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Prevention and health promotion could save Medicare $1.4 trillion over 10 years

Government health promotion and prevention programs for pre-Medicare and Medicare populations could save the country as much as $1.4 trillion over 10 years—and add, on average, as many as six years on Medicare beneficiaries’ lives, according to a new Center for Health Research (CHR) at Healthways report.

The report, Potential Medicare Savings Through Prevention & Health Risk Reduction, found that focusing on programs that keep people healthy, reduce health risk factors, and manage chronic conditions—before and during Medicare—can have long-term cost savings. In fact, although these programs could extend beneficiaries’ lives, the researchers found the cost savings associated with keeping people healthier would offset the extra years of life and coverage under Medicare.

“In this report, we clearly showed that you can, in fact, reduce risk and this does increase life expectancy, but you can still achieve savings over the course of a lifetime,” says Elizabeth Rula, PhD, lead researcher at the CHR.

With baby boomers reaching Medicare age, the Medicare population is expected to jump from 45 million to nearly 80 million by 2030. Couple that fact with the healthcare reform debate in Washington, DC, and one can see why healthcare thought leaders and policymakers are searching for programs and cost savings to bend the healthcare cost curve.

In its research, the CHR worked with Ingenix Consulting in Eden Prairie, MN, to develop several scenarios that examined the effect of varying distributions of population risk for people entering Medicare at age 65 and varying rates of risk progression of all beneficiaries.

The model used Medicare Parts A and B data from the 5% Sample Limited Data Set for 2002 through 2006, Medicare Trust Fund enrollment projections, and Vital Statistics age/gender-specific mortality rates to provide estimates of average Medicare costs based on age and stratified health risk. The model found that the government spends an average of $174,000 per beneficiary over the course of his or her time in the program. In other words, the 37.5 million seniors in Medicare fee-for-service in 2005 will cost $6.5 trillion.

The researchers found a range of potential savings through a combination of health promotion, prevention, and chronic care management initiatives before and after age 65. The gross savings estimates ranged between $652 billion and $1.4 trillion over 10 years (in 2008 dollars) and include:

  • A modest scenario that reduces risk prior to and during the years of Medicare by increasing the promotion of low-risk individuals at age 65 from 54% to 65% and preventing 10% of upward risk transitions
  • Larger savings that were found by increasing the low-risk population at age 65 from 54% to 75% and preventing 50% of upward risk transitions that otherwise occur during the Medicare years

Although the projected savings are gross and not net, Wilkins says costs of such wellness and prevention programs should not eclipse more than 30% of the savings.

The researchers did not recommend any specific prevention and disease management programs, but they did suggest smoking cessation, cardiac disease management, and health club memberships for older adults with diabetes. Anne Wilkins, executive vice president and chief strategy officer at Healthways, says the programs could be separated into three categories: keeping healthy people healthy; helping people with modifiable lifestyle risks, such as being overweight and lacking physical activity, change their behaviors; and assisting people who already have health conditions, such as diabetes, better manage their conditions.

“This paper opens up the discussion on prevention and wellness for the pre-65 population,” says Wilkins.

The researchers said the government has tried supply-side solutions, such as adjustments to payment and coverage, as a way to try to control costs, but it has been largely unsuccessful.

One barrier for prevention programs is that the Congressional Budget Office has cited that there is not sufficient evidence in the areas of preventive programs. The researchers said this is because there isn’t a “clearly delineated model of what the impact of a successful program would be.”

The researchers concluded that the scenarios presented in their study showed that a larger percentage of healthy or low-risk individuals entering Medicare would lead to lower health costs. “Although the levels of risk reduction tested in these seniors could not be achieved immediately after implementation of health and wellness programs, they represented a spectrum of possible outcomes that could be achieved over time and make a case for implementing such programs in the near term so that savings can be realized as soon as possible,” the researchers said. “If it can be demonstrated that the magnitude of these potential savings is significantly greater than the cost of the interventions needed, there would be significant net savings to the taxpayer.”