Last Time, I Promise (for a while anyway)

Because I lead a somewhat pathetic existence, I couldn’t keep my self from jumping into the Health Affairs article from August 2006, “The Rise In Spending Among Medicare Beneficiaries” this weekend. Go ahead, be jealous of the fun in our household!

The article opens with a recurring theme that has stickiness with me, “Medicare spending is projected to nearly triple from 3 percent of U.S. gross domestic product (GDP) in 2006 to 8.8 percent by 2030.” Depending on whose article you read, numbers like these vary study-to-study, but the trend is incontrovertible; Medicare is the gasoline that is fueling healthcare’s unsustainable assault on the US economy. And, if something isn’t done in fairly short order, “Government” is going to have to respond in one of three ways: 1. Raise general revenues (i.e., taxes), 2. Cut spending of other federally supported programs (e.g., defense, social security, other social services), or 3. Cut spending on health.

Assuming 1 and 2 are not terribly practical and/or in and of themselves insufficient to tame the beast, that leaves one option....

Last week I mentioned that the magnitude of cuts necessary to meet regulatory guidelines are too draconian to be feasible. So, that seems to steer us back to, gasp, personal responsibility and the role of chronic conditions. The article points to research that show “increases in treated disease prevalence during the 1990s account for a large share of the growth in spending by private health insurers.” I like that phrase, “treated disease prevalence.” It is non-judgmental. It just captures how much more disease was treated. The causes of this rise includes, “increases in the population prevalence of disease, more aggressive treatment of asymptomatic or mildly symptomatic patients, better detection of diseases, innovation and new technologies that allow the treatment of conditions previously left untreated, and declining mortality.”

To get at the heart of understanding this rise in treated disease prevalence, the authors dig into data surrounding “metabolic syndrome” which encompasses many of the key risk factors of heart disease; glucose levels, HDL cholesterol, blood pressure and triglycerides as well as abdominal obesity. They then examine these factors against three variables that can drive increased cost of treated disease: 1. Change in prevalence of the condition in the population, 2. Change in cost per case for treating the condition and 3. Change in the number of people in the Medicare program.

Their findings, boiled down: The top ten conditions accounted for two-thirds of the rise in Medicare spending between 1987 and 2002, and three conditions, hypertension, diabetes and high cholesterol account for 16.1% of the increase. Interestingly, the growth in the cost of treating each of these conditions is fueled by a different factor: high cholesterol growth was fed primarily (65%) by growth in prevalence, high blood pressure by change in cost per case (65%) – likely the development of new drugs, and diabetes mostly by change in enrollment (42%) though change in prevalence accounted for 34% of the growth in treatment costs.

Now the big, “duh” here is the high correlation between abdominal obesity and these growth rates. “The share of obese Medicare beneficiaries in the …data sets increased from 9.4 percent in 1987 to 22.5 percent in 2002…Overall, the prevalence of obesity among Medicare beneficiaries has doubled since 1987, but the share of spending incurred by obese beneficiaries has almost tripled.”

Now I didn’t set out to pen an anti-obesity screed. That’s not the point. The point is, again, that Medicare’s appetite for federal dollars is tied to its beneficiaries “appetites” and the ultimate victims, other than the patients themselves, will be hospitals and physicians in the form of reduced payments. Some argue that medical education add-ons will be the first to go, followed by critical access or disproportionate share payments. That, in essence, amounts to punishing some of the most critical elements of the US healthcare system because of America’s addiction to high fructose corn syrup!

McKinsey & Company conducted an interesting analysis that examined the drivers of healthcare costs on both the supply and demand side of the equation. One of the demand drivers they identify that might play a role in this battle is what they term “social norms.” Generally, “social norms dictate the frequency with which people consume health care products and services.” McK & Co. theorize that, “if social norms were to shift dramatically so that overeating and under exercising became truly abhorrent, demand for health care could fall.” Unfortunately, they don’t believe this is likely. In fact, they predict the opposite, “more likely, though, as incomes rise and as people see friends and neighbors consulting their doctors for obscure and perhaps even trivial health problems, demand will continue to rise.”

I believe now is the time is for an institutional healthcare-government partnership to attack these behavioral diseases. It could energize the disease management functions within private health insurers with “bonuses” for results. The problem has to be attacked in the pre-Medicare population and then continued under the Medicare program, perhaps with a penalty/premium for patients under management.

This might be the runner in me being mean, but the numbers are too sobering to ignore.