Use incentives to lower health costs

By MERRILL MATTHEWS

PROVIDENCE JOURNAL

ALEXANDRIA, Va. — Here’s a startling statistic: Roughly 20 percent of American patients account for about 80 percent of our health-care spending.

In a $2.1 trillion-a-year health-care system, that’s nearly $1.7 trillion annually.

In the growing political debate over how to reform the system, that such a small percentage accounts for the vast majority of expenditures is often ignored. It shouldn’t be; as Willie Sutton said when asked why he robbed banks, “Because that’s where the money is.”

Much of that money goes toward combating chronic diseases such as diabetes, asthma, heart disease, high blood pressure, mental-health conditions and, increasingly, obesity — to name some of the most common.

Those diseases often can be well-managed and costs contained when physicians, patients, employers and insurers are all pulling in the same direction — promoting and embracing healthy lifestyles.

But chronic diseases can also result in poor health, greatly reduced quality of life and premature death when not properly treated.

Take diabetes, for example. A recent study estimates that in 2005, the country spent $80 billion on diabetes — some put the estimates even higher — and rising.

That’s because the incidence of diabetes is directly related to obesity, and obesity is quickly becoming an epidemic. A new government study released at the American Diabetes Association’s annual meeting estimates that since 1990, obesity has been rising about 5 percent annually.

Costly medical conditions

In addition, millions of Americans face medical conditions that can be very expensive to treat, such as cancer or the birth of a premature child.

Fortunately, the health-care industry is attempting to more closely monitor and manage these specific conditions in an effort to improve the quality of care and patient outcomes. But it isn’t always easy because patient compliance is a real problem. Recent studies indicate that only about 50 percent of patients take their medications as directed. However, that percentage can increase sharply when patients are being actively monitored.

One of the most notable success stories is the “Asheville Project.” The city of Asheville, N.C., contracted with pharmacies to help manage city employees’ chronic conditions. Not only did patients’ quality of care improve, within one year per-employee costs dropped from $6,127 to $3,554. Now, several employers have joined the program, and it is being expanded to many other cities.

We also should be focusing more on prevention and wellness. To the extent we can get patients exercising and living healthier lives, avoiding certain behaviors such as smoking, overeating and excessive alcohol consumption while visiting their doctors on a regular basis, we can reduce the incidence and severity of many diseases and/or catch them in their early stages.

No easy task

But don’t expect miracles. Humanity has a long and disappointing track record of engaging in practices that harm the body and the mind. Redirecting that mindset won’t be easy — or quick.

Nor have we considered how far we want to go in this direction. Some employers recently have moved to a policy of prohibiting all employee smoking — not just at work, but even on their own time and in the confines of the employees’ own home. We should encourage healthier lifestyles, but too much employer intrusion may be incompatible with a free society.

Education can help, but most smokers and overweight individuals know what they’re doing isn’t healthy. So that probably isn’t the only answer.

We can also look for ways to provide incentives for good behavior. Many employers now offer incentives to avoid risky behavior and take certain positive steps. Major health insurer WellPoint recently announced that it will link 5 percent of employee bonuses to an index that will track 20 different clinical areas to measure patient-care improvement.

And we can reduce negative incentives. The Wall Street Journal reports that some insurers are reducing or eliminating co-pays for some chronic-disease medications.

Finally, new insurance products, such as Health Savings Accounts, promote financial responsibility and encourage people to live a healthier lifestyle because they benefit financially from making good choices.

If we really want to lower health-care spending and improve the quality of care — and that’s what most politicians claim they want to do — it will take proactive steps on the part of health-care providers, employers, insurers and, ultimately, patients.

With the proper case management for some, and the proper incentives for all, we can make significant steps toward achieving those goals.

X Merrill Matthews is director of the Council for Affordable Health Insurance, an association of insurance companies. Distributed by Scripps Howard News Service.