The Economics of Chronic Care and its Impact on ReformPublished: August 13, 2010 in Knowledge@Emory
During the contentious healthcare reform debate in the U.S., insurance companies were often painted as the heartless bad guys who denied coverage to Americans with preconditions and eagerly dismissed claims, forcing thousands into bankruptcy in the name of greater corporate profits.
But that is not an accurate portrayal of the health insurance industry, says Sam Nussbaum, executive vice president of clinical health policy and chief medical officer for WellPoint Inc., the nation’s largest health insurer. Speaking before a packed auditorium of doctors, faculty, and community members as part of the Future Makers Lecture Series sponsored by Emory University’s Woodruff Health Sciences Center, Nussbaum contends that while the newly enacted reforms have some bright spots, meaningful health system change must start with doctors, hospitals, and insurers that promote efficient, evidence-based care.
Health insurance premiums have ballooned by 118 percent over the last decade, outpacing the rate of inflation and workers’ earnings, says Nussbaum. The cost of premiums varies widely by state. For instance, in New York, where health insurance is voluntary but insurers can’t turn down applicants based on health status or risk, and where premiums are the same for all age groups, a 20-year-old would pay a premium of $1,177/month in 2008. That was 11 times higher than in neighboring Connecticut, where insurers were permitted to underwrite for individual coverage and base premiums on age. Individuals with medical needs purchase insurance while those who are healthy most often do not, according to Nussbaum. This is why, he maintains, mandating coverage is an essential element of the Affordable Care Act
The U.S. spends vastly more than other advanced economies for hospital, physician, pharmaceutical, and health administration services, according to statistics cited by Nussbaum. While the U.S. leads the world in healthcare expenditures, it ranks thirty-seventh based on the overall health of its population. Americans have fewer, shorter average hospital stays than citizens of other nations, but that is offset by a higher unit cost. At the same time, more Americans are visiting specialists rather than primary care physicians, contributing to rising costs.
“The real drivers of healthcare costs are advancing technologies applied to an aging population with chronic illness,” says Nussbaum. But higher costs don’t necessarily translate into better quality care. Nussbaum cites studies based on Medicare data that have shown that as healthcare costs increase, quality actually suffers.
“Thirty percent of the care we deliver is not evidence-based and is not in accordance with the best clinical knowledge,” he says. “If we take that 30 percent out, it will leave us with the financial headroom for innovation.”
Bone marrow transplantation, for example, was used as a treatment for breast cancer at a cost of $5 billion during the 1980s and 1990s, before three subsequent studies proved it ineffective.
Even among the country’s leading academic medical centers, there is a three-fold variation in the average number of hospital days during the last six months of a patient’s life. (Emory Healthcare ranks in the middle of the pack at 15 days). Meanwhile, statistics show that premature death is more related to genetic predisposition and behavior patterns than to health care, Nussbaum says.
The reimbursement system must be reengineered to reward physicians for improving quality and managing costs, not sheer volume, he says. Physicians need to receive incentives—similar to pay-for-performance—for engendering patient satisfaction, prescribing less expensive generic medications over brand drugs, and adopting evidence-based medical procedures. He adds that Patient Centered Medical Homes and Accountable Care Organizations represent new approaches to medical organizations and innovative funding models.
Of WellPoint’s more than 33 million members, five percent are responsible for more than one-half of the insurer’s medical spending. Nationwide, chronic diseases, such as heart disease, diabetes, and asthma, account for three-quarters of America’s total healthcare spending and significantly reduce work productivity. Taking a coordinated approach to care, such as emphasizing comprehensive primary care, enlisting nurse practitioners as case managers, and preventing unnecessary ER visits and hospital readmissions, can lead to lower premiums, Nussbaum says.
Similarly, comparative effectiveness research, which compares therapeutic approaches to determine what works best for patients, addresses unsustainable healthcare costs by empowering patients and their doctors to choose the most effective treatments, according to Nussbaum. The U.S. spends $90 billion annually on the treatment of back pain, for instance, despite research showing that most back pain resolves within six weeks, independent of treatment.
By reviewing peer-reviewed medical research and engaging medical specialty societies and academic medical centers, the U.S. can choose to invest in superior treatments, he says.
Nussbaum cites research showing that patients with diabetes who received phone support and waivers for co-pays on preventive care, medication, and supplies were more likely to seek out preventive care and comply with their medication program.
“Cost savings may not be immediate, however, by making these investments to better treat chronic illness,” he says, we will see long-term savings.”
Healthcare providers must work to “raise the baseline of medical literacy” and overcome cultural barriers to accessing care, says Nussbaum. African American women in Georgia, for instance, are 50 percent more likely to be diagnosed with stage 2 breast cancer than other demographic groups.
Nussbaum also called on insurance companies to enhance patient and drug safety by compiling data on members’ pharmacy and laboratory records and claims, and by better coordination with federal and local health authorities.
He referenced the nation’s experience with Vioxx, a non-steroidal, anti-inflammatory drug widely used to treat arthritis and other conditions. Following FDA approval, it took five years before Vioxx was pulled from the market in 2004 over concerns about the increased risk of heart attack and stroke with prolonged use. “Access to our information would have revealed that increased risk in three months,” Nussbaum says and adds that WellPoint is working with the FDA and CDC to assess drug and vaccine safety.
Jason Schneider, an assistant professor in Emory's School of Medicine who attended Nussbaum’s talk, agrees that the issue of containing costs was not adequately addressed during the healthcare reform debate.
“If we don’t have a single-payer system, there has to be some incentive for practicing evidence-based and cost-effective medicine,” he says. “We have only begun to move forward.”