Improved Diabetes, Obesity and Disability Management Could Yield Savings

The study, “Using Clinical Information to Project Federal Health Care Spending”, which was published as a September 1 Web Exclusive in Health Affairs, yields important insights in at least two key areas. First, it presents a model for how the Congressional Budget Office and the Office of Management and Budget can forecast the short and long term costs and savings associated with initiatives to better manage and ameliorate the effects of major long term conditions such as diabetes. Current costs estimating methods look at cost and savings only over a relatively short 10-year time span, which often distorts what true spending and savings patterns might really look like over the longer haul. In reporting on the study, The Washington Post notes:

"Preventive services for the chronically ill may reduce health-care costs, but they are unlikely to generate the kind of fantastic savings that President Obama and other Democrats have said could help pay for an overhaul of the nation's health system, according to a study being published Tuesday." "Using data from long-standing clinical trials, researchers projected the cost of caring for people with Type-2 diabetes as they progress from diagnosis to various complications and death. Enrolling federally-insured patients in a simple but aggressive program to control the disease would cost the government $1,024 per person per year — money that largely would be recovered after 25 years through lower spending on dialysis, kidney transplants, amputations and other forms of treatment, the study found. However, except for the youngest diabetics, the additional services would add to overall health spending, not decrease it, the study shows." These findings offer health care reform advocates added ammunition regarding arguments "that the 10-year horizon typically used by CBO analysts is too brief to capture the savings that eventually result from improved public health." The authors suggest that the CBO use a 25-year budget window to calculate prevention program costs (Montgomery, 9/1).

The Post further reports that House Speaker Nancy Pelosi and Sen. Tom Harkin (D-Iowa), among others, have been highly critical of how under the current rules CBO cannot include potentially large long term savings that might occur outside the ten year window in any of its scoring of health and long term services reform legislation. Studies like this one offer two sets of important insights and opportunities:

First, such research clearly shows that if we as a nation are to have any real chance of “bending the curve” of health and LTSS spending, we must get better at identifying, managing and mitigating the effects of diabetes, obesity and other chronic conditions. Rand recently published a brief aptly entitled, “Disability & Obesity -- The Shape of Things to Come”, that is also a must read for anyone committed to bringing about true health and community living services and supports reform and finding savings to pay for it. One just has to go to nursing homes in DC a stone’s throw away from Congress and the White House to see that the shape of things to come is already here and the time to reshape things is now.
Second, while these studies come too late to have much of an effect on the current health reform debate, they can and likely will affect how CBO and OMB as well as the little known but extremely influential CMS actuaries score future initiatives. Disability activists and our policy-making allies would be well advised to recognize, however, that this brings with it both good news and bad news – for where there are potential long-term savings there are likely to be long-term costs to be identified and scored as well.