Prevention Fund spending and cuts

The following article takes on the topic of prevention as it applies to the Affordable Care Act (i.e., Obamacare). This article originally appeared in HealthAffairs Blog.

The Prevention and Public Health Fund, created by the Affordable Care Act, is an historic investment toward improving the country’s health and quality of life, reducing health care costs for families and businesses, and increasing productivity so the country can compete with the rest of the world.  It provides the chance to change our sick care system to a true health care system that focuses on keeping people healthy in the first place and ensuring that today’s children aren’t at risk of living shorter, less healthy lives than their parents.

Last month, Congress voted to use a portion of the fund to finance the Medicare Sustainable Growth Rate (SGR), often known as “doc fix.”  Quite frankly, eliminating shortfalls resulting from Medicare’s flawed SGR formula with cuts to the nation’s first dedicated Prevention and Public Health Fund is short-sighted and counterintuitive. Cutting prevention to pay for doctors’ visits is illogical – prevention is the best way we have to actually improve the health of Americans and reduce their need to go to the doctor in the first place.

Despite these cuts, the Prevention Fund is still poised to significantly improve the health of Americans.  The Fund will provide over $13 billion of new support for disease prevention over the next 10 years and $20 billion over the subsequent 10 years.  Prevention is an investment in our future – it is the key to lowering health care costs and creating a long-term path to a healthier and economically sound America.

The purpose of the Fund is to spur new, transformative investments that will create a healthier and more prosperous nation and reduce health care costs.  Thus it is important that we protect the Fund from future doc fixes, and that we be vigilant about how the President and Congress use the Fund.  The President’s fiscal year (FY) 2013 budget request makes some poor choices in using the Fund to supplant existing public health programs at the Centers for Disease Control and Prevention (CDC) while cutting the signature Community Transformation Grant (CTG) program by $80 million next year.

Even more distressing is the President’s proposal to cut CDC’s base funding by $660 million in FY 2013, a short-sighted approach to addressing our nation’s fiscal challenges.  The 11 percent cut to CDC’s budget authority is the largest proposed cut within the U.S. Department of Health and Human Services (HHS) – and is approximately a $1.4 billion cut (over 20 percent) since FY 2010.

The Necessity of Prevention

Chronic diseases – such as heart disease, cancer, stroke and diabetes – are responsible for seven out of 10 deaths among Americans each year and account for 75 percent of the nation’s health spending. Addressing the risk factors for these diseases – such as tobacco use, poor diet, and physical inactivity – will allow us to improve the health of Americans and reduce health care costs over the long term.

Indeed, in 2010, the Congressional Budget Office (CBO) reported that nearly 20 percent of the increase in health care spending from 1987 to 2007 was caused by obesity. CBO reported that spending per capita for obese adults exceeded spending for adults of normal weight by about 8 percent in 1987 and by about 38 percent in 2007. With obesity rates continuing to climb, we can expect associated illnesses and health care costs to continue to increase as well.

In addition, chronic diseases are driving the growth in Medicare spending. A 2010 study published in Health Affairs found that more than half of Medicare beneficiaries are treated for five or more chronic conditions per year. The rate of obesity among Medicare patients doubled from 1987 to 2002, and spending on those individuals more than doubled. If current trends continue, obesity rates could be expected to grow from 32 percent to 50-51 percent for men and from 35 percent to 45-52 percent for women by 2030, according to a study by the Trust for America’s Health (TFAH).

These rates of obesity could contribute to more than six million cases of type 2 diabetes, five million cases of coronary heart disease and stroke, and more than 400,000 cases of cancer in the next two decades. The combined medical costs associated with treating preventable obesity-related diseases are estimated to increase by $48-66 billion per year in the United States by 2030, while the loss in economic productivity could be as high as $540 billion. The best way to get health care costs under control and increase productivity is through prevention.

The solution is out there: prevent chronic diseases from happening. TFAH’s study found that reducing the average body mass index by just five percent in the United States could lead to more than $29 billion in health care savings in just five years, due to reduced obesity-related costs.  The analysis concluded that the country could save $158.1 billion in 10 years and $611.7 billion in 20 years by focusing on reducing BMI and preventing the development of chronic conditions.  And how could we achieve that 5 performance reduction?  This is the explicit performance measure associated with the Community Transformation Grants – a program the President’s budget proposes to cut in FY13.

The CTGs, as one core component of the Fund, represent a particularly groundbreaking approach to health in the United States:  transforming our focus from treating people only after they’ve become sick to finding ways to keep them healthier in the first place.  In the initial round of CTGs, 214 communities applied and 59 received funding.  There is a strong desire to help make healthy choices easier for millions of Americans.

Through the Prevention Fund and other initiatives, we can dramatically lower health care costs while improving health. The Prevention and Public Health Fund will help communities make policy, environmental, programmatic and infrastructure changes to ensure that healthy choices are the easy choices for America’s families. If we fail to continue this investment, today’s children could be at risk of living shorter, less healthy lives than their parents.

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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