Health Affairs: Govt miscalculating cost of chronic disease

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For economists and policy makers to understand the true value of the costs and savings of preventive health programs for chronic disease, the Congressional Budget Office (CBO) should incorporate longer-term clinical outcomes data and look beyond the current 10-year window standard when making cost estimates, according to research published in the Sept. 1 issue of Health Affairs.

University of Chicago researchers developed a simulation model that incorporates critical findings from landmark clinical trials, illustrating that an investment in early, aggressive prevention and treatment of diabetes yields payoffs that increase over time, with a significant amount of the benefits accruing after the current 10-year CBO window.

"Diabetes is a prime example of a chronic illness with long-term health and cost consequences,'' wrote health policy economist co-author Michael O'Grady, senior fellow at the National Opinion Research Center at the University of Chicago. He and his colleagues conducted their work with a grant from the National Changing Diabetes Program (NCDP), a Novo Nordisk diabetes initiative.

The CBO typically provides Congress with economic forecasts covering a 10-year period, but with health policy directed at chronic illnesses such as diabetes, "a near-term focus is problematic, as the natural history of disease progression often goes well beyond ten years,” the authors wrote. They added that using a 10-year cost projection is not long enough to fully capture the effects of many medical interventions.

"It is our hope that the CBO and lawmakers will strongly consider these data as they debate the value of investments in prevention of diabetes and other chronic disease," said Dana Haza, senior director of the NCDP.

To demonstrate this, the authors created the Diabetes Population Cost Model, a computer simulation that integrates a diabetes progression model with publicly available data from a number of sources, including the U.S. National Health and Nutrition Surveys and the U. K. Prospective Diabetes Study. The model shows annual expenses of a diabetes program at a cost of $1,024 per patient are offset by 58 percent over 10 years, and when carried out to 25 years, are offset by 89 percent.

It is time to update the CBO system of “scoring” costs for health interventions, devised in the mid-1970s, to capture the impact of prevention, commented James S. Marks, MD, senior vice president of the Robert Wood Johnson Foundation Health Group.

“The CBO scoring system is skewed away from preventative health," he noted.

O’Grady and colleagues wrote that the “escalating cost of caring for people with chronic diseases today and in the future is of national concern.” Over the next 25 years, the authors projected that annual total spending on diabetes and its complications for people over age 24 will increase to about $336 billion—growing at an annual percentage rate faster than both gross domestic product and Medicare spending.

The researchers said the new simulation model provides a population-wide perspective on the natural progression of type 2 diabetes over time and associated cost consequences for Medicare and other payors.

“Using well-established, epidemiological data, the model connects indicators of health status of people with diabetes, and probable healthcare service use, to quantifiable measures of disease control over time,” they wrote.

The authors recommended that the primary cost-estimating agencies, CBO and the Centers for Medicare & Medicaid Services (CMS), should consider incorporating clinical data in modeling efforts and thus improve the rigor of certain cost projections in certain instances.

According to these analysts, chronic diseases are the leading cause of death and disability in the United States, and treatment of these diseases accounts for 75 percent of national healthcare spending. Diabetes affects nearly 24 million Americans, and that cohort is expected to rise to 50 million by 2025.

The Lewin Group estimated diabetes cost $218 billion in 2007, in medical care and lost productivity. A Mathematica report, also commissioned by NCDP, found the federal government spends nearly $80 billion annually to treat people with diabetes and its complications, while only about $4 billion is spent on disease prevention and health promotion activities that could affect diabetes.