Reliable and relevant information needed to rein in the costs of federal health-care programs, says study

Sep 3 2009

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 long-term clinical outcomes data and look beyond the 10-year window when making cost estimates, says a team of University of Chicago researchers in today's issue of Health Affairs.

The team 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,'' writes health policy economist Michael O'Grady, Senior Fellow at the National Opinion Research Center at the University of Chicago. He and co-authors Elbert Huang, Anirban Basu, and James Capretta conducted their work with a grant from the National Changing Diabetes(R) Program (NCDP), a diabetes leadership initiative established by Novo Nordisk to drive health systems change at the national and local levels.

The CBO provides Congress with economic forecasts based on impartial analyses of the costs of federal programs, such as Medicare or Medicaid. These forecasts traditionally cover a 10-year period, as required by current rules, which remain appropriate in certain cases.

But for health policy directed at chronic illnesses such as diabetes, the authors write, "a near-term focus is problematic, as the natural history of disease progression often goes well beyond ten years.''

"We commissioned this research following a review of long-term outcomes studies that indeed demonstrate preventive health care for people at high risk of developing diabetes and complications is effective. Other key studies indicate good diabetes care can have decade-long benefits," said Dana Haza, senior director, NCDP. "It is our hope CBO and lawmakers will strongly consider these data as they debate the value of investments in prevention of diabetes and other chronic disease."

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 National Health and Nutrition Surveys and the United Kingdom Prospective Diabetes Study. The model shows annual expenses of a diabetes program at a cost of $1,024 per patient are offset by 58% over 10 years, and when carried out to 25 years, are offset by 89%.

Science as a driver of policy

If such data from clinical medicine are to be used, it is important to recognize that, in some circumstances, using a 10-year cost projection is not long enough to fully capture the effects of many medical interventions.

"This is particularly true for diabetes,'' the authors write. By limiting estimates to a 10-year window, "the full impact of policies intended to head off unnecessary expenses will not be in full view,'' they note.

It's time to update the CBO system of "scoring'' costs for health interventions, devised in the mid-1970s, to capture the impact of prevention, says James S. Marks, M.D., M.P.H., senior vice president of the Robert Wood Johnson Foundation Health Group.

"Research has shown that programs aimed at prenatal care, childhood vaccines, smoking cessation and diabetes prevention and treatment have a tremendous return on investment,'' he says. "As a medical doctor, I've never seen a patient who would choose treatment over not getting sick in the first place,'' says Marks. "Yet the CBO scoring system is skewed away from preventative health.''

Science in the last decade has pointed toward new approaches and treatments that can improve the lives of people with diabetes. Large clinical trials have shown that early, intensive treatment to reduce blood glucose levels, control blood lipids such as cholesterol and lower blood pressure can delay or prevent debilitating and costly complications of diabetes, such as heart disease, stroke, blindness, kidney disease and amputation.

As medical breakthroughs are published, the findings can be tracked by federal budgetary forecasters -- the Office of the Actuary at the Centers for Medicare and Medicaid Services, which provides estimates of proposed policy costs for the Administration, and the CBO, which does that for Congress -- but currently neither agency uses epidemiological modeling to forecast costs and benefits of alternative health policies.

"In the current approach, budget forecasters consider how many people will be affected by legislation, how much it will cost to enroll them, and what tax revenue will be used to cover additional costs," says Dr. Huang, Assistant Professor of Medicine and a Research Associate of the Center on Demography and Economics of Aging at the University of Chicago. They do not account for the natural history of a chronic disease or the impact of treatment, "so under the current budget scoring process, the baseline estimate of health care costs may be inaccurate and the potential cost offsets of improved health care delivery are not counted,'' he says.

By understanding how a disease progresses and the effect of treatment, forecasters can get a more accurate estimate of the budgetary impact of new legislation, he says. "Having these new chronic disease models allows you to do this.''

Skyrocketing costs

The escalating cost of caring for people with chronic diseases today and in the future is of national concern. The Baby Boom generation is entering the years when costly chronic illnesses become more common; at the same time, the rate of obesity, which is associated with type 2 diabetes and other illnesses, has increased dramatically in the last 20 years.

Type 2 diabetes is "the prototypical example of a chronic condition with long-term health implications,'' the authors write. Though usually diagnosed in mid-life, it is being found more often in young people. Symptoms develop slowly, and many people go undiagnosed for years, even as the damage to their bodies has accumulated silently. Debilitating and costly complications of diabetes, such as kidney failure, vision loss or nerve damage that leads to amputation develop over many years, so the positive effects of better treatments that begin at the time of diagnosis may not be apparent for decades.

Over the next 25 years, the authors project 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.

Conclusions

• This new simulation model provides a clear, population-wide perspective on the natural progression of type 2 diabetes over time and associated cost consequences for Medicare and other payers. Using well-established, epidemiological data, the model connects indicators of health status of people with diabetes, and probable health-care service use, to quantifiable measures of disease control over time.
• In certain instances, the primary cost-estimating agencies, CBO and CMS, should consider incorporating clinical data in modeling efforts and thus improve the rigor of certain cost projections.
• Because certain chronic illnesses progress slowly over many years, sometimes even decades, a 10-year cost projection window can be insufficient for capturing the full cost consequences of alternative policy scenarios. For instance, an upfront investment in an intervention designed to improve diabetes control and avoid costly complications would yield cost savings benefits beyond 10 years.

For policymakers to develop strategies to rein in the costs of federal health-care programs they need the most reliable and relevant information available, the authors argue. While epidemiological modeling of federal health costs is new, needs more testing and does not answer all questions, it does present a realistic and rational way for policymakers to understand the complex interactions of disease progression and the health and cost benefits of alternative medical interventions.