Download Modeling Return on Investment for Community

Prevention for a Healthier America:
Return on Investment for Disease
Prevention at the Community Level
Jeffrey Levi, PhD
Beyond Health Care Coverage
The Commonwealth Club
San Francisco, CA
February 23, 2009
Prevention for a Healthier America
Prevention for a Healthier America:
Financial Return on Investment?
With a Strategic Investment in Proven Community-Based Prevention
Programs to Increase Physical Activity and Good Nutrition and
Prevent Smoking and Other Tobacco Use
INVESTMENT:
$10 per person per year
HEATH CARE
COST NET
SAVINGS:
RETURN ON
INVESTMENT
(ROI):
$16 Billion annually
within 5 years
$5.60 for every $1
Key premises



Coverage is important, but what surrounds (or precedes)
coverage is also important
 Achieving good health outcomes requires healthy
communities, not just healthy individuals
Drivers of health care costs (chronic disease) can often be
effectively prevented in the community as opposed to managed
in the health care setting
 Reducing costs as a critical policy outcome
Disparities in chronic diseases related to disparities in the
“health” of communities
 Poverty, race/ethnicity and obesity
 Poor communities provide less support for healthy lifestyles
(food, physical activity)
Health Care Spending:
$2.2 Trillion in 2007
Prevention 4%
Health Behaviors
50%
Medical Services
96%
Environment
20%
Genetics
20%
Access to Care 10%
Factors Influencing
Health
National Health
Expenditures
SOURCE: CDC, Blue Sky Initiative, University of California at San Francisco, Institute of the Future, 2000
Focus on Community-Level Prevention
Reduces Health Care Costs




Universal agreement that prevention is a good thing;
increases length and quality of life
Growing evidence that some clinical prevention
interventions show savings in health care costs
Clinical interventions – one person at a time
Community interventions – an entire population
(those ill, those at risk, those well)

Evidence of savings from some population level
interventions (tobacco control, helmet laws, sanitation)
What is Community-Level Prevention?

Interventions that promote healthy environments and behaviors
– making it easier for people to make healthy choices, such as:
 Changing community norms and empowering communities
 Coalition and social network building
 Social marketing campaigns
 Changing the physical and social environments
 Organizational practices and governmental policies
 Facilities and programs
 Walkability – lighting, sidewalks, signs;
 Access to healthy foods
 Increasing individual knowledge and skills
How does community prevention differ
from workplace efforts?



Non-clinical
Creates a supportive environment that
reinforces efforts at the workplace
Reaches families, not just employees
Examples of community programs

Shape Up Somerville


Healthy Eating Active Communities (HEAC)


Schools, after school, neighborhoods, healthcare sector,
marketing changes
YMCA Pioneering Healthier Communities


School food, school activities, parent and community
outreach, restaurants, safe routes to school
Community coalitions, policy changes, leverage other
funding
Healthier Communities, Steps, REACH
Key Findings
1. Are there community-level interventions that could
reduce chronic disease levels – and thus affect the
biggest driver of increased disease, disability, and
cost?


Yes. Regardless of chronic condition targeted, most
interventions fell into 4 categories: physical activity,
nutrition, obesity, and smoking cessation.
Reduced or delayed incidence of disease; mitigation of
disease
Key Findings (2)
2. If we increased funding for community-level
interventions, we could see a return on
investment and more than break even in terms of
ROI.
3. Savings can be shown by payer – with private
payers and Medicare the biggest “winners.”
Or Are We Just Delaying High End-of-Life
Costs?

Compression of morbidity: extending healthy life
expectancy more than total life expectancy – literally
compressing chronic disease and disability into a
smaller proportion of life

Primary prevention delays or prevents disability vs.
management of disability (current focus of health care
system)



Preventing obesity – delaying or avoiding a knee replacement
Managing disability – providing a knee replacement
Obesity results in more chronic conditions, but not shorter life
Focus of the Model
Diseases



Expensive
Chronic
Amenable to
community-based
prevention
Interventions

Type of intervention

Effect on disease

Associated costs
Most Expensive Conditions








Heart disease
Cancer
Trauma
Mental disorders
Pulmonary conditions
Diabetes
Hypertension
Cerebrovascular
disease







Arthritis
Pneumonia
Kidney disease
Endocrine disorders
Skin disorders
Back problems
Infectious diseases
Priority Conditions








Heart disease
Cancer (selected)
Trauma
Mental disorders
Pulmonary conditions
(selected)
Diabetes
Hypertension
Cerebrovascular
disease







Arthritis
Pneumonia
Kidney disease
Endocrine disorders
Skin disorders
Back problems
Infectious diseases
Data Analysis

Data

Medical Expenditures Panel Survey (MEPS),
pooled 2003-2005 (adults only, excludes
nursing home care)

Methods

Regression analysis to predict expenditures



by disease cluster
by disease trajectory
by payer
Disease Clusters-Intervention Pathways:
Short Run
Medium Run
Long Run
Physical activity, obesity, nutrition, smoking cessation
diabetes
heart disease
stroke
renal disease
diabetes
&
HBP
HBP
cancer
arthritis
heart disease
stroke
renal disease
COPD
Effect of Interventions




We assume a sustained reduction in the
prevalence of diabetes and hypertension
Modeled as a one-time permanent change in
response to an ongoing community-level
intervention
We also assume a steady state population
In the current iteration of the model, we have not
yet taken into account changes in mortality
Plausible Intervention Effect

Literature review offers a broad range of
impact of community interventions


Literature supports that interventions can have an
impact of 10%, but we modeled a 5% impact to
be conservative (2.5% for cancers)
Literature does not consistently present data to
make comparisons across interventions
Cost-Benefit

Data are variable regarding per capita costs of
interventions.


Range in the literature is quite wide.
For the purpose of this exercise, we are assuming
an average of $10 per capita to be very
conservative and to permit a group of
interventions to be introduced, including some
that might be targeted and higher cost.
Net Savings: 5% Impact at $10 Per Capita Cost
(in Millions) (in 2004 dollars)
Short
Medium
Long
U.S. (Mid-term ROI: 5.60:1)
Care Cost Savings
$5,784
$19,479
$21,387
Intervention Costs
$2,936
$ 2,936
$ 2,936
Net Savings
$2,848
$16,543
$18,451
Short Run: 1 to 2 Yrs. ● Medium Run: 5 Yrs. ● Long Run: 10 to 20
Yrs.
Net Savings By Payer: 5% Impact at $10 Per
Capita Cost (in 2004 dollars)
1-2 Years
5 Years
10-20 Years
Medicare
$487 million $5.213
billion
$5.971
billion
Medicaid
$370 million $1.951
billion
$2.195
billion
Private
payers/Out
of Pocket
$1.991
billion
$10.285
billion
$9.380
billion
Annual Net Savings: California
(5% effect, $10 per capita cost, in 2004 dollars)
Short
Medium
Long
California (Mid-term ROI: 4.84:1)
Care Cost
Savings
Intervention
Costs
Net Savings
$621.4
million
$2,297.7
million
$358.41
million
$2,092.7
million
$358.41
million
$262.9
million
$1,734.3
million
$1,939.3
million
$ 358.41
million
Short Run: 1 to 2 Yrs. ● Medium Run: 5 Yrs. ● Long Run: 10 to 20
Yrs.
Net Savings by Payer: California
(5% effect, $10 per capita cost, in 2004 dollars)
Short
Medium
Long
MediCal
(state)
$12.7
million
$84.1
million
$94
million
Private
Payer/Out
of Pocket
$166.4
million
$1,097.8
million
$1,227.6
million
Medicare
(federal)
$71
million
$468.2
million
$523.6
million
Short Run: 1 to 2 Yrs. ● Medium Run: 5 Yrs. ● Long Run: 10 to 20
Yrs.
What’s not captured



Nursing home costs – which would increase
MediCal savings
Targeted efforts in high prevalence
communities would increase the return on
investment
Non-health care costs
Multiplier Effect
Limitations




Limited data on sustainability and scalability – hence
the assumption that only a one-time effect even
though intervention sustained over time. (Or new
interventions introduced over time.)
Model calculates savings from reductions in
prevalence; other models look at stemming the rise.
Savings in 2004 dollars, though costs have risen.
Model incorporates marginal cost of interventions,
not the cost of basic infrastructure.
Contributors

Trust for America’s Health


New York Academy of Medicine


Ruth Finkelstein, Gabriel Cohen, Ana Garcia, and Julie
Netherland
Prevention Institute


Jeff Levi, Chrissie Juliano, and Sherry Kaiman
Larry Cohen, Jeremy Cantor, and Janani Srikantharajah
The Urban Institute

Barbara Ormond, Brenda Spillman, Timothy Waidmann,
and Bogdan Tereshchenko
Policy Implications (1)

Messages:

Community-level prevention needs to be equal partner
with screening and clinical prevention


We cannot do health reform (or afford it) without addressing
community and clinical prevention
Workplace wellness programs need community-level prevention
to support or reinforce their impact




Business and labor should participate in community-level activities
Certain prevention interventions can save money
Polling shows the public is willing to invest in prevention
Congress and incoming Administration should recognize
improving the health of Americans as a national priority
Policy implications (2)

Need to identify creative ways to finance
community-level prevention

Contributions from those payers who benefit



Health reform – all funding options should be in
play
Medicare, Medicaid demonstrations
Economic Recovery Act: Opportunity to invest in
communities and make population healthier as we
move toward health reform
Policy implications (3)



Healthy communities perspective requires
eliminating stovepipes – and thinking how all
funding streams come together to improve
health
How can primary care and community
prevention work together?
How can we fund more creatively?

Appropriated funds, new streams (e.g., soda tax,
premium tax)
A Wellness Trust at state/local level?
A natural experiment


$650 million in stimulus bill to “carry out evidencebased clinical and community-based prevention and
wellness strategies…that deliver specific,
measurable health outcomes that address chronic
disease rates.”
“a historic commitment to wellness initiatives will
keep millions of Americans from setting foot in the
doctor's office in the first place -- because these are
preventable diseases and we're going to invest in
prevention.” – President Barack Obama, Feb. 17,
2009
Questions

To access the national edition of Prevention
for a Healthier America:
www.healthyamericans.org
The American Recovery and
Reinvestment Act of 2009: Social
Disparities and Health Improvement
Jeffrey Levi, PhD
Beyond Health Care Coverage
The Commonwealth Club
San Francisco, CA
February 23, 2009
Stimulus address multiple aspects of
social determinants of health

Poverty, education, and employment









Making Work Pay tax credit
Food stamp benefit increase
Unemployment insurance increases/expansions
Education funding
Workforce training and employment services
Emergency shelter
General support for states
Access to coverage and care
Access to prevention and support for a healthier
environment
Health specific aspects of stimulus


Medicaid support for states ($87.1 billion)
Extending health insurance for the unemployed
(COBRA) ($25 billion)





(9 months, 65% of premium with income <$125K/$250K)
Health center investments ($1.5 billion)
Health workforce ($500 million)
Steps toward reform: Health IT ($19.2 billion) and
comparative effectiveness ($1.1 billion)
Public health investments ($1 billion)
Public health investments


$300 million for immunizations, including
adult immunizations
$650 million for community prevention
programs such as Healthier Communities
Rationale for stimulus


Overall objective: Meeting immediate
economic needs of states and those most
affected by the recession
Health IT, comparative effectiveness and
prevention funding: down payment on
systemic reform
California’s share 2009-11
(estimates from Center on Budget and Policy Priorities)



Administration estimates creates or saves 396,000
jobs in CA over 2 years
Making Work Pay Tax credit: 12,570,000 people
Medicaid: $11.23 billion


Increase in federal match by 6.2%; additional increase
based on unemployment level
State Fiscal Stabilization Fund


Education: $4.9 billion
Flexible: $1.084 billion
California’s share 2009-11 (2)

Education



Unemployment Insurance



Title I: $1.591 billion
IDEA: $1.28 billion
2.4 million recipients will receive $25 increase
506,000 new beneficiaries
Supplemental Nutrition Assistance Program


$1.466 billion = 13.6 % increase in benefits
2,432,000 beneficiaries affected
California’s share 2009-11(3)

Workforce Training and Employment
Services




Youth Services: $185 million
Dislocated Workers: $225 million
Adult Activities: $80.9 million
Emergency Shelter Grant Program


$190.7 million
Assist 25,200 households in CA
OMB Guidance: Transparency and
Accountability





Funds are awarded and distributed in a prompt, fair, and
reasonable manner;
The recipients and uses of all funds are transparent to the
public, and the public benefits of these funds are reported
clearly, accurately, and in a timely manner;
Funds are used for authorized purposes and instances of
fraud, waste, error, and abuse are mitigated;
Projects funded under this Act avoid unnecessary delays and
cost overruns; and
Program goals are achieved, including specific program
outcomes and improved results on broader economic
indicators.
Keeping the focus


Assuring that discretionary dollars are used in
targeted ways that address social determinants
of health
Research agenda:


Measuring impact on social determinants and on
health – regardless of motivation for funding
Showing a return on investment
For further information

Center for Budget and Policy Priorities


GWU analysis of health provisions


www.gwhealthpolicy.org
TFAH efforts on stimulus


www.cbpp.org
www.healthyamericans.org/stimulusdocs
Federal site

www.recovery.gov