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CCH® BENEFITS — 9/24/09

Budgetary Effects Of Prevention Programs Need Clinical Data Over A Long Time Period

From Spencer's Benefits Reports: Although preventive health measures will not necessarily save money on health care spending, over the long term, they at least will offset a large part of the costs of the prevention programs, according to a study published in the September 1 online journal Health Affairs. Health care reform proponents often claim that expanding coverage and preventive health measures will lower health care costs.

The study researchers, from the University of Chicago’s Medical School and the National Opinion Research Center, detail how an “epidemiological” assessment over a period of 25 years, not the commonly used ten-year period, can more accurately project the actual costs of health care reform measures, because “the positive effects of improved treatment often take decades to show clinically significant effects.” In contrast, “an epidemiological model could inform budget projections beyond ten years, with transparent methods and an acceptable level of reliability.”

The Health Affairs article, “Using Clinical Information to Project Federal Health Care Spending,” looked at the effects for ten-year and 25-year periods of implementing a diabetes disease management program for individuals ages 24 through 64. The per-patient annual costs of such a program, taking into account care quality improvement and provision of preventive medications and routine tests, was estimated at $1,024.

The researchers elected to review the effects of a diabetes disease management program due to the growing prevalence of the disease, not only with the rising age of the population, but also with the increasing rate of obesity in the United States. It is estimated that by 2009, in the adult population ages 24–85, 19.5 million people will have been diagnosed with type-2 diabetes and another 4.25 million people will have undiagnosed type-2 diabetes.

The researchers found that the disease management program would not produce savings, but will offset costs for reductions in expenses incurred for treatment of major complications. In addition, the cost offsets would be much higher over the longer, 25-year period than over the ten-year period—89% of program costs would be offset in 25 years, compared with 58% of costs in the ten-year period.

The study pointed to the failing that “legislative initiatives that produce near-term costs but longer-term savings are only examined based on their ten-year cost impact,” when long-term thinking in terms of health care policy would produce better results. It might be important to reconsider the traditional budgetary time frame simply because of the potential threat of long-term health care cost problems for the economy.

“In addition to providing insight into future cost projections, epidemiologically-based models can inform decision-making regarding possible alternatives to current policy,” the study authors wrote. “We believe that models that integrate clinical epidemiology and trial data would improve understanding among policymakers of the dynamics of disease progress and realistic expectations regarding the health and cost benefits of alternative scenarios.” This study “illustrates the potential for epidemiologically-based simulation models to inform the federal budget estimating process,” the researchers concluded.

For more information, visit http://www.healthaffairs.org.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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