It's been said that being intimately familiar with your health and managing illnesses early on that could eventually become chronic, could save quite a bit of money in the future. How much exactly? Well, according to a newly released report that tracked 850,000 seniors on Medicare – these elements can save ailing Center's for Medicare and Medicaid Service's program about $1 trillion dollars over the next decade.
The report, titled Potential Medicare Savings Through Prevention & Health Risk Reduction, was released yesterday by the Center for Health Research (CHR) at Healthways (Franklin, Tennessee).
"The model [used for the report] is able to quantify how much Medicare is spent on each person," Elisabeth Rula, a lead researcher at CHR at Healthways told Medical Device Daily. "It's also able to answer the question of how much would be saved in the Medicare program if we could reduce the risk of patients suffering from a chronic illness."
The study is based on an actuarial model developed and tested by Igenix Consulting (Eden Prairie, Minnesota). It uses Medicare data from the 5% Sample Limited Data Set for the years 2002–2006 and Medicare Trust Fund enrollment projections and Vital Statistics age/gender-specific mortality rates to allow estimates of average Medicare costs based on age and stratified health risk.
The study looked at nearly 850,000 people.
The model estimates that, per Medicare FFS beneficiary, the government will spend an average present value of $174,000 more than the course of their tenure in the program, from age 65 until death. The total lifetime cost to the nation of the nearly 37.5 million seniors in the Medicare FFS population in 2005 will be $6.5 trillion.
"On average we found that once a beneficiary becomes eligible for Medicare, that on average it would cost $174,000 for coverage," Rula said.
Working with the senior professional staff at Ingenix, the CHR developed several scenarios for the model to test. These scenarios examined the impact of varying distributions of population risk for the population entering Medicare at age 65 as well as varying rates of risk progression for all beneficiaries.
The calculations yielded a range of potential savings that could accrue from a combination of health promotion, prevention and chronic care management initiatives prior to and/or after the age of 65. The savings were estimated at between $652 billion and $1.4 trillion over 10 years (in 2008 dollars), specifically:
• A modest scenario that reduces risk prior to and during the years of Medicare by increasing the proportion of low risk individuals at age 65 from 54% to 65% and preventing 10% of upward risk transitions that would otherwise occur during the years of Medicare was estimated to save $65.2 billion annually, or $652 billion in savings over 10 years;
• and a more forward scenario of increasing the proportion of low risk individuals at age 65 from 54% to 75% and preventing 50% of upward risk transitions that would otherwise occur during the years of Medicare was estimated to save $142.8 billion annually, or $1.4 trillion in savings over 10 years.
Overall the research indicates there is a major opportunity from the standpoints of cost and longevity resulting from more focus on population-scale programs that keep healthy people healthy, mitigate or reduce health risk factors both before and after entry into Medicare and/or proactively manage chronic conditions after onset.
The study also predicts that by preventing or slowing health risk progression, the average Medicare beneficiary would gain 2.4 to 5.7 years of life expectancy, and savings to the taxpayer would still accrue, despite the associated increases in longevity.
"This study is a framework for what success will look like; and provides a benchmark for programs that will prevent chronic disease," she said.