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Do Complications of Chronic Disease really absorb Eighty Percent (80%) of the Healthcare Dollar?



I received the following email a few days ago.

Could you please provide a reference that supports the 80% statistic ("Fixing the complication absorbs 80% of the healthcare dollar")?  I am not questioning this number, but I would like to read more about it.  Thanks!

There are many articles in the literature to support the 80% rule. Our focus is on Diabetes Mellitus a disease that cost society about $150 billion dollars.

The best recent reference is published in a story in the LA Times on June 19, 2006 entitled “Medicare Looks to Boost Seniors’ Use of Preventive Care.”

Mark B. McClellan Medicare administrator said in an interview “If you take a big step back and look at Medicare spending, 90%-plus of what we are spending is going for the complications of chronic disease.” He goes on to say “We can get healthier beneficiaries and lot lower costs related to complications if we can get more prevention.”

Medicare’s budget is $336 billion dollars a year. In some diseases, you can reduce the complication rate by 50% or more as shown by the DCCT (Diabetes Control and Complications Trial) NEJM 1993.

If we spend 90% of the healthcare dollar on complications of disease for persons over 65, and we can reduce the complication rate by 30% rather than the 50% or the theoretical 100%, the cost saving would be $90 billion. If we could reduce the complication rate by 50%, the savings to the Medicare system would be $168 billion. Then Medicare would not have to solve their increasing cost of care problem by reducing payment to physicians yearly, and restricting patient access to care.

Since Medicare is the payer of last resort, physicians have finally gotten the governments attention about the “Power of Prevention”. The 2007 Medicare handbook will focus on preventive care. Medicare will finally start paying for preventive care.

Complications of chronic diseases take a long time to develop. It has been estimated that Diabetes mellitus takes 8 years to discover from the time of onset of disease and the onset of complications even longer. Many times a high blood sugar is discovered when the patient is in the Cardiac Intensive Care Unit after having a heart attack. Coronary artery disease is the most common complication of Type 2 Diabetes Mellitus. If the blood sugar was controlled by intensive self management this complication could have been reduced 30-100% depending on the control of the blood sugar. There are many other complications in other chronic diseases states that the “Power of Prevention” will stop.

The private insurance industry has been very slow to pay for prevention of chronic complications. I imagine the thinking is “we pay for some things that are broken”. If something becomes broken, we will pay but raise the insurance premium or not offer the employers insurance next year. If you are self employed, simply getting older and at greater risk for disease might make it impossible to buy insurance.

How do we motivate the private insurance industry to pay for a future event that will not happen on their watch? A clue is that every State has a State Insurance Board that licenses the insurance company to sell insurance in that State. We, the people, have to do is educate our politicans, policy makers and State Insurance Boards and demand coverage for chronic disease from the insurance company in order for them to sell health insurance in our state.

There are many other things we, the people, will have to demand. We will get to them in time.

The LA Times article goes on to state that “some of the results have been disappointing to Medicare officials. 2% of eligible seniors have taken advantage of the physical examinations that are paid for. “Only 54% of male beneficiaries get Prostate Specific Antigen, or PSA blood test- prostate cancer screenings that are free."

Why is that? The presentation of the information is confusing to the elderly. The patients are afraid to be checked for fear of discovering an unknown illness. Patients do not understand the Power of Prevention. Patients lack economic incentives to participate in prevention.  Chronic disease management is not a strong card in the Primary Care physicians’ deck as I have stated previously. However, we, the medical profession, are trying very hard to improve the Quality of Care for Chronic Disease.

I will cover my opinions for the reasons for all of the above and more in future blogs.

The article is worth reading completely.    

  • Eric Mattson

    Great post.
    Here’s my question.
    Can the market be allowed to solve the problem? What if the cost scale for insurance was weighted based on the amount of preventative health steps one took?
    What happens then?

  • BuddhaMouse

    Thanks for this excellent, informative post.
    I have begun reading the pdf on diabetes, but have not yet finished it, so forgive me if my next question is answered there. I wonder if you would comment on the following point, which has puzzled me for a while.
    Why are there so many people suffering from type 2 diabetes, when, so far as I understand it, it is almost completely preventable?
    While it would surely be a great savings to prevent the *complications* associated with this disease, would it not be even better to prevent the disease *itself*, altogether?
    This is not an abstract question for me. My brother has been warned that he is pre-diabetic. If my doctor announced to me that I was pre-diabetic, I would do everything that I could to halt the disease in its tracks. But strangely, my brother is less concerned; he continues to live a rather stressful lifestyle, does not exercise, maintains an unhealthy weight, and has a poor diet.
    If people won’t make an effort to stop a disease when it hasn’t yet taken root, will they take the extra effort required to prevent complications to a disease once it has occurred? Perhaps a large part of our problem is that many or most people refuse to take responsibility for their own health. Maybe they are uneducated about just how much control they have, or perhaps they are in denial about it?
    Dear Buddhamouse
    You hit on one of the answers to repairing the healthcare system. People have to be responsible to themselve. It is a free country and we have to make free decisions. However, at our expense and not societies expense.
    Education is a key element and technology and the internet are valuable resources. I will go into this in great detail as we procede.
    A big questions is why are Americans getting so becoming obese when obesity is not good for you. These are all individual decisions. Increasing obesity increase the onset of Type II Diabetes.
    Stanley Feld M.D.,MACE

  • Levi Clark

    My question relates to the issue concerning Health Insurance in the Chronic community. What advantage would the Insurance Industry have by creating a “Chronic Medical Insurance” in a market-driven US economy?

  • electronic medical records

    This is a very interesting article on the new stimulus package including healthcare. I was actually very happy to hear about it and also believe in the innovations and upsides as well. But as I was blindsided and I think Obama was as well, the immediate reaction from this was the healthcare stocks dropped dramatically. It is kind of like a downward spiral for our economy. I truly hope that everything pulls together as we all are equal and we should all have decent healthcare as well.

  • Electronic Medical Records

    Many people with potentially life-threatening conditions cannot afford to buy the medications and supplies that keep their illnesses under control

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