HEALTH CARE COST DRIVERS

C H R O N I C D I S E A S E ,

D R I V I N G H E A L T H C A R E C O S T S

by Mikel Chavers

When it comes to expensive chronic diseases driving health care costs, the issue gets very personal with Alabama Sen. Vivian Davis Figures. That’s because her mother is suffering from Alzheimer’s disease and her mother-inlaw died with Alzheimer’s disease.

As the co-chair of The Council of State Governments Health Policy Task Force, Figures shared her personal connection with the costly disease at CSG’s annual meeting in November. And although she said she won’t let the fear of potentially developing Alzheimer’s dictate her life, it seems the disease does dictate ever-rising health care costs, according to some experts.

But Alzheimer’s isn’t the only thing driving health care costs.

Chronic Diseases Expensive

Alzheimer’s costs $148 billion in health care every year, said Stephen Geist, regional director for the California Southland Alzheimer’s Association. That means someone will be diagnosed with the disease every 70 seconds— and that’s going to be an increasing burden for states to bear.

Geist said states—particularly in the Northwest—will experience an estimated 81 to 127 percent increase in Alzheimer’s cases in the next 15 years. Yet only 11 states have a state Alzheimer’s plan, according to Geist.

That’s not to mention the 9.9 million unpaid caregivers that often foot the bill to care for

THE COSTS OF CHRONIC DISEASE AFFECT FAMILIES

ST. LOUIS, MO—Grace Kidwell, 78, was diagnosed with Alzheimer’s disease in the spring of 2006 and her husband John was diagnosed with leukemia in December 2006. The couple’s son, Tim, in the background, cares for his parents, who live in an apartment close to his home. Caring for his parents became a full-time job for Tim, who quit his job to care for his parents. Photo: Lorena Ros/Getty Images

MAINE PROVIDES HELP WITH MEDICARE PRESCRIPTION DRUG BENEFIT

PORTLAND, MAINE—Rita Schwenk, 71, checks her blood sugar at her home. Schwenk receives medication under the Medicare prescription drug benefit program. Diabetes is one cost driver in the health care system. Photo: Joe Raedle/Getty Images loved ones with Alzheimer’s. Sixty percent of caregivers are women, he said.

Diabetes is another health care cost driver, according to Dr. Fran Kaufman, chief medical officer with Medtronic Inc., Diabetes an associate of The Council of State Governments.

Type 2 diabetes is increasing mostly due to obesity, Kaufman said. And what’s worse, it’s a disease that requires multiple interventions, making it costly to manage.

“If we can’t prevent this, then we’ve got to have better ways to effectively manage it,” Kaufman said.

The money spent on diabetes between 2006 and 2007 nearly doubled, according to Kaufman. In 2007, $174 billion was spent on diabetes in the U.S., she said.

“This is not about me alone in a room with a patient and a family,” Kaufman said. “It’s about how to manage (and) whether someone lives a healthy lifestyle and has access to good health care.”

Kaufman believes preventive measures could go a long way in reducing the complications of diabetes.

In fact, many think preventing underlying issues that lead to costly chronic diseases is the way to reduce what’s driving health care costs.

An article published in the Journal of the American Medical Association often cited to support the point that prevention is a key to cutting health care costs is, “Bending the Cost Curve: A Critical Component of Health Care Reform.” That article by Stephen M. Shortell, dean and professor of the School of Public Health at University of California Berkeley, said disease prevention initiatives aimed at nutrition, physical activity, tobacco use and lifestyle changes will have the greatest impact on bending the health care cost curve. For more on prevention, see article on page 27.

Nutrition, physical activity, tobacco use and lifestyle behaviors have the largest influence on reducing the future burden of disease, particularly when it comes to obesity and what follows: diabetes, heart disease and cancer, according to Shortell’s article.

Some Say Technology is Culprit

But not everyone believes chronic diseases are the main culprit to mounting health care costs. Some experts say expensive new medical technology is to blame for increasing health care costs and they believe technology ranks as the number one key driver of health care costs.

“I think the consensus in the research field would be the technology is the key driver of health spending,” said Brian Quinn, research & evaluation officer on the Health Care Coverage Team at the Robert Wood Johnson Foundation. The Princeton, N.J.-based foundation’s mission is to improve the health and health care for Americans.

“Chronic diseases such as obesity are a factor. So I don’t want to say that they aren’t a cause, but I think that the consensus among the research community is that technology is really the key,” Quinn said. “We are developing new and more sophisticated ways of treating our illnesses and those technologies are quite expensive.”

Quinn said states are looking at new ways to design health care delivery and health care payment options to make sure doctors are only using the most expensive medical technologies when they are essential.

Shortell’s article also said something similar. In order to bend the cost curve, the nation must address “the behavior of patients, hospitals and physicians as they use available technologies and treatments,” according to the article. A key to changing hospital and doctor behavior is taking a look at the financial incentives driving them, according to the article.

States have tried to use regulation for decades to try to rein in health care costs with mixed success, Quinn said. An example of one type of regulation used in many states is a state’s certificate of need process, where the state must authorize new services or new construction at a health care facility. That’s how some states tried to rein in health care costs, Quinn said.

But now there’s a different approach.

“What we’re seeing is a movement toward systems redesign … it’s about trying to provide the incentives to get providers and hospitals to use technology and services in the most efficient way,” Quinn said.

Doctors are largely paid under a fee for service arrangement, where a certain amount is paid for each service provided to a patient. “And so it’s really rethinking how payment can be redesigned to be more effective,” Quinn said. For a heart attack patient, for example, instead of being paid for each step along the way in the service provided, the doctor would be paid one lump sum payment using a bundling approach. It would be up to the doctor to identify the best course of treatment for the patient, Quinn said.

“States can have more success in reining in health care costs by trying to use expensive technologies only in the most appropriate places,” Quinn said.