Reform Update: Obesity, chronic-disease care could undermine cost control efforts

The spreading obesity epidemic, greater intensity of medical care and greater prevalence of chronic disease contributed the most to health spending growth during the better part of the last quarter century, according to new research released this week.

As policymakers debate how best to slow health spending that is straining the federal budget, the results suggested cost containment efforts could fail unless they target health promotion and efficient chronic-disease management, wrote Kenneth Thorpe, a health policy and management professor in the Emory University School of Public Health, in the journal Health Affairs.

More efficient and effective chronic-disease management has emerged as a key strategy for controlling costs at accountable care organizations, one of the organizational and payment models being tested by Medicare under the Patient Protection and Affordable Care Act. The ACO model still isn't widespread among U.S. healthcare delivery organizations.

It appears to be working in some of the hospital systems where it is being tried. Banner Health, one of the first Medicare ACOs, has reduced hospital admissions and repeat hospital visits with more aggressive care coordination.

The Phoenix-based system has focused on its more complex patients and on coordinating care for the chronically ill, said Dr. Tricia Nguyen, chief medical officer of Banner Health Network, during a March interview. During the program's first year, Banner's hospital admissions dropped 8.9%; high-technology imaging use declined 6.7%; avoidable readmissions fell 6%; and costs to Medicare per patient declined 2.5%, she said.

Thorpe said there can be valid reasons for the increased treatment and rising costs for patients with chronic diseases. New clinical protocols to prevent heart disability and death, for instance, often require more expensive interventions or medication. It's worth the additional investment, he said in an interview.

But some areas call for a greater focus on prevention, not more medical intervention. For instance, the spreading obesity epidemic accounted for roughly 10% of the increase in health spending between 1987 and 2009, according to his research.

The study used data from 1987, 1996 and 2009 from nationally representative samples of adults with Medicare and private insurance. Increased intensity of treatment accounted for nearly 12% of the spending increase.

But greater disease prevalence—more people seeking treatment—was by far the most significant factor driving growth, accounting for about 51% of increased spending. It was more pronounced among Medicare patients at 77%.

“The current findings strongly suggest that much of the recent discussion about how to control healthcare spending, particularly among Medicare beneficiaries, may be focused on the wrong set of issues,” Thorpe wrote.

“Reducing payments to providers, increasing cost sharing to Medicare patients, or increasing the age of Medicare eligibility would certainly reduce the growth of federal spending on healthcare. However, these strategies are unlikely to reduce total health care spending by and for Medicare patients.”

A special issue of Health Affairs released this week took a closer look at the recent slowdown in U.S. health spending and found patients with “more skin in the game” has little to do with it. One study from Harvard University researchers found that health spending slowed among workers with employer-sponsored insurance even when benefits did not require workers to spend more of their own money for medical care. Another paper examined spending data from 2007 to 2011 for 150 large employers and found an estimated only 20% of the slowdown was attributed to insurance benefits that increased household out-of-pocket costs. But even without an adjustment to reflect greater household financial risk, health spending fell in 2010 and 2011. “This slowdown may be a reflection of broader trends toward slower diffusion of technology or more fiscally conservative practice patterns by healthcare providers,” the study said.

Another Health Affairs study said health spending by the public sector would drop by $770 billion over a decade if trends behind the slowdown persist. Slightly more than half of the health spending slowdown since 2003 was unexplained by an analysis by David Cutler and Nikhil Sahni of Harvard University. The Great Recession could be blamed for 37% of the more moderate growth. Medicare pay cuts accounted for the rest (8%). “The evidence thus suggests at least as strong a case for structural changes as for cyclical factors,” the authors wrote.