Prevention and Health Promotion Could Save Medicare $1.4 Trillion Over 10 Years

HealthLeaders Media Staff, July 30, 2009

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 6 years on Medicare beneficiaries' lives, according to a new Center for Health Research at Healthways report.

Today's report, Potential Medicare Savings Through Prevention & Health Risk Reduction, found that focusing on programs that keep people healthy and reduce health risk factors, and manage chronic conditions—before and during Medicare eligibility—can have long-term cost savings. In fact, though 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 expenses that the federal government would have to pay for 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 and one can see why healthcare thought leaders and policymakers are searching for programs and savings to bend the healthcare cost curve.

In its research, the CHR worked with Ingenix Consulting to develop several scenarios that examined the financial impact of improving beneficiaries' health before they enter Medicare as well as lowering health risks and extending their lives while in Medicare.

The model used Medicare Parts A and B data from the 5% Sample Limited Data Set for the years 2002-2006, 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 a life in the program. In other words, the 37.5 million seniors in Medicare fee-for-service in 2005 will cost $6.5 trillion over their lifetimes.

The researchers found a range of potential savings through a combination of health promotion, prevention, and chronic care management initiatives before and after the age of 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.

  • The larger savings were found by increasing the low-risk population at 65 from 54% to 75% and preventing 50% of upward risk transitions that otherwise occur during the Medicare years.

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

The researchers did not have any specific prevention and disease management programs in mind, but they suggested some examples, such as smoking cessation, cardiac disease management, and health club memberships for older adults with diabetes.

Anne Wilkins, executive vice president, chief strategy officer at Healthways, says the programs could be split 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.

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