Monday, April 25, 2011

Medical Costs and Lifestyle Decisions

It is hard to conceive of any fiscal issue more important than that of containing and diminishing healthcare spending. Continuing on the theme that there is good news within bad news, we look at the impact of lifestyle on medical costs.

McKinsey Quarterly contributed an article we reviewed here pointing out that in most countries about 75% of medical costs are devoted to treating patients with a small number of chronic conditions. McKinsey presented results from focused Disease Management Programs (DMPs) indicating that significant cost savings could accrue in the treatment of patients already suffering from these maladies.

An article in the New York Times by Mark Bittman reminds us that many of these expensive diseases are, to a great extent, preventable.
“For the first time in history, lifestyle diseases like diabetes, heart disease, some cancers and others kill more people than communicable ones. Treating these diseases — and futile attempts to ‘cure’ them — costs a fortune, more than one-seventh of our GDP.”

“But they’re preventable, and you prevent them the same way you cause them: lifestyle. A sane diet, along with exercise, meditation and intangibles like love prevent and even reverse disease. A sane diet alone would save us hundreds of billions of dollars and maybe more.”
Using Bittman’s numbers we are talking about $2 trillion being expended on “avoidable” diseases each year.

The American Heart Association chips in with this assessment.
“Cardiovascular disease (CVD) is the leading cause of death in the United States and is responsible for 17% of national health expenditures. As the population ages, these costs are expected to increase substantially.”

“To prepare for future cardiovascular care needs, the American Heart Association developed methodology to project future costs of care for hypertension, coronary heart disease, heart failure, stroke, and all other CVD from 2010 to 2030. This methodology avoided double counting of costs for patients with multiple cardiovascular conditions. By 2030, 40.5% of the US population is projected to have some form of CVD. Between 2010 and 2030, real (2008$) total direct medical costs of CVD are projected to triple, from $273 billion to $818 billion. Real indirect costs (due to lost productivity) for all CVD are estimated to increase from $172 billion in 2010 to $276 billion in 2030, an increase of 61%.”

“These findings indicate CVD prevalence and costs are projected to increase substantially. Effective prevention strategies are needed if we are to limit the growing burden of CVD.”
Here is a similar prediction concerning what is generally referred to as the “diabetes epidemic.”

“More than half of all Americans may develop diabetes or prediabetes by 2020, unless prevention strategies aimed at weight loss and increased physical activity are widely implemented, according to a new analysis.”
To which Bittman adds:
“Similarly, Type 2 diabetes is projected to cost us $500 billion a year come 2020, when half of all Americans will have diabetes or pre-diabetes. Need I remind you that Type 2 diabetes is virtually entirely preventable? Ten billion dollars invested now might save a couple of hundred billion annually 10 years from now. And: hypertension, many cancers, diverticulitis and more are treated by a health care (better termed “disease care”) system that costs us about $2.3 trillion annually now — before costs double and triple.”
The bad news is that healthcare costs and health projections are disastrous. The good news is that these trends can be reversed. By encouraging (imposing?) better lifestyles, eliminating fraud, developing better healthcare delivery structures, and applying more efficient and effective Disease Management Programs, we should be able to make dramatic reductions in healthcare costs. Recall that about half of all these costs come out of government accounts. The potential for savings is enormous.

It would seem to make sense to address our budget deficits by pursuing these approaches to reigning in costs before we consider significant reductions in benefits.

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