can we reduce our federal deficit and create jobs by making the healthy choice the easiest choice?...
TRANSCRIPT
Can We Reduce Our Federal Deficit and Create Jobs by Making
the Healthy Choice the Easiest Choice?
Presenters
Moderator Mari Ryan, MBA CEO, Advancing Wellness Member, Board of Directors, Health Promotion Advocates
Speaker Michael P. O'Donnell, PhD, MBA, MPH Editor in Chief and President, American Journal of Health Promotion Member, Board of Directors, Health Promotion Advocates
Format
• CBO Long Term Budget Projections
• Health Related Causes of Federal Spending – Medical Care, Medicaid, other Health Spending
– Social Security
• Strategy to Improve Health • Some of the numbers
• Next Steps
This is a work in progress and we need your help refining it!
Primary Spending and Revenues, by Category, Under CBO’s 2011 Long-Term Budget Scenarios
Percentage of GDP
Source:CongressionalBudgetOffice,2012
CBO Spending Projections Extended baseline: Current laws continue
• Bush era tax cuts, payroll tax cuts, emergency & unemployment benefits will expire 12/2012
• Federal spending in all areas except health care, social security and interest will decline to historically low levels.
Alternative scenario (deemed more likely given political pressures).
• Bush era tax cuts will be extended.
• Medicare payments to physicians will not decline…aka the “Doc Fix”
• Cost containment provisions in Affordable Care Act stop after 2021. (Note: spending would be even higher if Affordable Care Act is ruled unconstitutional or repealed)
• Federal spending in areas beyond health care, social security and interest will reach historically low levels, but not as low.
Financial Cliff: scheduled tax increases + sequestration = recession?
• Barclays Capital estimate these would reduce 2013 annualized 1st quarter growth rate from 3.0% to 0.2. Bush tax cuts: 1.0%; payroll tax: .8%, unemployment: .2%; sequestration automatic spending cuts: .8%
Primary Spending and Revenues, by Category, Under CBO’s Long-Term Budget Scenarios Through 2085
Percentage of GDP
Source:CongressionalBudgetOffice,2012
Mandatory Federal Spending on Health Care, by Category, Under CBO’s Extended-Baseline Scenario
Percentage of GDP
Source:CongressionalBudgetOffice,2012
8
Spending for Social Security Under CBO’s Long-Term Budget Scenarios
Percentage of GDP
Other Federal Spending Under CBO’s Long-Term Budget Scenarios
Percentage of GDP
Source:CongressionalBudgetOffice,2012
Federal Debt Held by the Public Under CBO’s Long-Term Budget Scenarios Through 2085
Percentage of GDP
Source:CongressionalBudgetOffice,2012
Causes of Short Term and Long Term Debt are Different
Short Term
• Domestic discretionary spending* is not the problem – Historical range: 3.2% -5.25% of federal spending – 2011: 4.3% – 2014: 3.2% (match recent historical low) – 2016: 2.8% (new historical low)
• 2019 projected debt ($ trillions) 20.0 – Wars in Iraq & Afghanistan 2.3 – Medicare Drug Program 1.2
– Stimulus (2008-2012 tax cuts & spending) 1.7
– Bush era tax cuts 2001-2012 3.2 – Bush era tax cuts 2013-2019 4.1 – Baseline debt & other 3.1
* HHS (minus Medicare/Medicaid), Transportation, Agriculture, Judiciary, Education, HUD, Interior, EPA, NASA, etc
Note:AllstartwithPresident’s1stbudgetwhichis2ndyearinoffice
5‐15AnnualizedSpendingIncreasesbyPresident
BacktoLongTerm
A crisis
that will cause
our nation’s economy to implode
Primary Spending and Revenues, by Category, Under CBO’s Long-Term Budget Scenarios Through 2085
Percentage of GDP
Source:CongressionalBudgetOffice,2012
What are the root health related
causes?
Underlying health related causes
MedicareCosts
MedicaidCosts
LowtaxRevenue
SocialSecurityCosts
Chronic Disease
Lifestyle
Poverty & Inequality
Aging Society
MedicaidCosts
MedicareCosts
SocialSecurityCosts
LowTaxRevenue
Yikes!
Source:O’Donnell,AJHPJuly,2012
Adults Meeting Cardiovascular Health Metrics NHANES 1988-1994, 1999-2004, and 2005-2010.
Yang, Q. et al. JAMA 2012;307:1273-1283 .
Risk Factors (positive) 2005-2010 1. Not smoke 77.4% 2. Physically active 45.2 3. BMI ≤ 25 32.5 4. Nutritious diet 22.2
5. Cholesterol ≤200 46.0 6. BP <120/80 42.8 7. Glucose < 100 59.2
% of population meeting 7 of 7: 1.2% 6 of 7: 7.5% 5 of 7: 16.6% 4 of 7: 22.4% 3 of 7: 25.5% 2 of 7: 18.0% 1 of 7: 7.3% 0 of 7: 1.4%
Leading Causes of Death: Chronic Diseases (US, 2010 Preliminary)
# %
Heartdisease 595,44424.15%
Cancer 573,85523.27%
Stroke 129,1805.24%
COPH 137,7895.59%
Accidents 118,0434.79%
Alzheimer’s 83,3083.38%
Diabetes 68,9052.79%
Flu&pneumonia 50,0032.03%
Nephri\sandrelated 50,4722.05%
Suicide 37,7931.53%
Na\onalVitalSta\s\csReports,Vol.60,No.4,January,2012
Most Medical Spending is Tied to Chronic Diseases
21
Allspending… Medicare
Source:PartnershipforSolu\ons.ChronicCondi\ons:MakingtheCaseforOngoingCare.September2004Update.Availableat:hap://www.rwjf.org/files/research/Chronic%20Condi\ons%20Chartbook%209‐2004.ppt.AccessedonApril17,2007.
Sharespentonpa?entswithchronicdiseases
83%
Medicaid
96%
23
The Population Age 65 or Older as a Percentage of the Population Ages 20 to 64
Percent
Source:CongressionalBudgetOffice,2012
Can We Reduce Our Federal Deficit and Create Jobs by Making
the Healthy Choice the Easiest Choice?
ROI Workplace Health Promotion Programs
Study focus # studies # studies Sample size (m) Duration Savings Costs ROI w/costs (years)
Medical costs 22 13 3,201 3.0 $358 $144 3.27
Absenteeism 22 15 2,683 2.0 $294 $132 2.73
Source:BaickerK,CutlerD,SongZ,HealthAffairs,Feb2010
Meta-analysis
2012 Meta-Evaluation Findings: Overview
Study Parameter Averages & Totals (N=62)
Average Study Years 3.83 Observational Years 241.3 Year Reported (Median) 1996 # of Study Subjects 546,971 # of Control Subjects 213,291 Average # of Program Targets 5.2 % Change in Sick Leave -25.1% (26) % Change in Medical Costs -24.5% (32) % Change in Workers’ Comp -40.4% (4) % Change in Disability Costs -24.2% (3) C/B Ratio 1:5.56 (25)
©..27
Source: Chapman, L., Meta‐Evalua\onofEconomicReturnStudiesforWorksiteHealthPromo\on:2012UpdateAmJHealthPromot26,4
Progression of Disability by Age�University of Pennsylvania Study 1986-2005
FriesJF,etal.JAgingRes2011,Ar/cleID261702.
w/60%ofcohortdead‐delaydisability10years‐delaydeath3.5years‐compressdisability6.5years
A caution to health promoters
Better health delays onset of disability.
We don’t yet know if improving health will compress morbidity, or just delay it, extend life, and possibly increase lifetime medical costs.
A caution to policy makers
If the federal government increases the retirement age and people are not healthy enough to work, people will not work, tax revenues will not increase and costs of the Social Security Disability Program (SSDI) will increase.
Back of the Spreadsheet Calculations
If improving health of the population can…
• expand years of working life 5 months, it will reduce the federal debt 1.6%
• expand years of working life 4.5 years, it will reduce federal debt 16% • expand years of working life 9 years, it will reduce federal debt 32%
• reduce annual rate of increase of Medicare .1 percentage point, it will reduce the federal debt 1.5%
• reduce annual rate of increase of Medicare 1 percentage point, it will reduce the federal debt 15%
• reduce annual rate of increase of Medicare 2 percentage point, it will reduce the federal debt 30%
and, oh yea, improve the wellbeing and quality of life of millions of people
• Is my math right?
• What needs to happen to achieve this level of change?
The beginning of the framework to answer these questions………
If we agree that improving health provides the best strategy to preserve the fiscal solvency of
our nation how do we improve health?
Make the healthy choice the easiest
choice!
Priorities
1. Provide opportunities for the most disadvantaged – So they can work and pay taxes
– To reduce/eliminate Medicaid spending
– To reduce disease and costs linked to poverty and inequality
2. Focus mission of federal departments
3. Provide opportunities to enhance the health and wellbeing of the full population
Fair Society Healthy Lives (The Marmot Review)
Social Determinants of Health
1. Give every child the best start in life
2. Enable all children, young people and adults to maximize their capabilities and have control over their lives
3. Create fair employment and good work for all 4. Ensure healthy standard of living for all
5. Create and develop healthy and sustainable places and communities
6. Strengthen the role and impact of ill-health prevention.
Source:FairSocietyHealthyLives,Ins\tuteforHealthEquity,2010
Focus Mission of Federal Departments
• Department of Agriculture: support an agriculture industry that can provide the most nutritious food to the greatest number of people at an affordable price.
• Department of Transportation: support transportation modes that move people and products efficiently, but do so in a way that enhances health through active transportation modes, facilitates social interaction and creation of a sense of community, and minimizes environmental toxins.
• Department of Education: improve the intellectual achievement, but also the physical, emotional, social, and spiritual health of the youth of the nation.
Weave a web of support that reaches people several times
each day with the most effective strategies where they work,
shop, study, worship and relax.
FundingfromOrganiza\onsthatBenefittoOrganiza\onsthatCanEngagePeopleinEffec\vePrograms
Workplaces
ParksFaithGroups
Employers
Clubs ChildcareK‐12
SchoolsColleges
Hospitals&Clinics
USTreasury CMSInsurers
PeopleHealth
promo\onproviders
Restaurants&grocers
?
Source:O’Donnell,AJHP,July,2012
StateMedicaid
FitnessCenters
Definition of Health Promotion
Health Promotion is the art and science of helping people discover the synergies between their core passions and optimal health, enhancing their motivation to strive for optimal health, and supporting them in changing their lifestyle to move toward a state of optimal health.
Optimal health is a dynamic balance of physical, emotional, social, spiritual, and intellectual health.
Lifestyle change can be facilitated through a combination of learning experiences that enhance awareness, increase motivation, and build skills and, most important, through the creation of opportunities that open access to environments that make positive health practices the easiest choice.
Michael P. O'Donnell (2009) Definition of Health Promotion 2.0: Embracing Passion, Enhancing Motivation, Recognizing Dynamic Balance, and Creating Opportunities. American Journal of Health Promotion: September/October 2009, Vol. 24,
No. 1, pp. iv-iv.
Increase Awareness Enhance Motivation
Build Skills Create Supportive
Environments
Private Sector Takes the Lead, State and Federal Governments Do Their Share
• Employers support their employees at work
• Employers support families of employees at home, in school, at college, in church, in the park, at the club, in community organizations…where ever they are…
• Insurance companies reach customers at work, in the doctor’s office, in school, in college…where ever they are…
• Medicare and Medicaid reach members at home, in the doctor’s office, at church, in community organizations…where ever they are…
Budget • Budget: $200/person year * 310,973,329 million ≈ $62,394,665,883/year
• Existing funding for public (health RWJF October 2011 Policy Highlight Brief)
– $40.84/person in 2005^ 490%
• Existing workplace health promotion industry – $2 billion 3200%
• Liquid assets on non-farm, non-financial balance sheets (Federal Reserve quarterly Flow of Funds Q4, 2011) – $2.23 trillion* 2.8%
• Spending in medical care in United States – 2.9 trillion 2.15%
But, short term benefits may cover all costs in the short term in addition to reducing the federal deficit in the long term
FundingfromOrganiza\onsthatBenefittoOrganiza\onsthatCanEngagePeopleinEffec\vePrograms
Workplaces
ParksFaithGroups
Employers
Clubs ChildcareK‐12
SchoolsColleges
Hospitals&Clinics
USTreasury CMSInsurers
Healthpromo\onproviders
Restaurants&grocers
?
MichaelP.O'Donnell,PhD,MBA,MPH,2012
$34.4 billion
$10.8 billion
$3.95 billion
$24.1 billion
$4.9 billion
$2.36 billion
StateMedicaid
$4.5 billion $16.1 billion
$20.7 billion
$4.3 billion
FitnessCenters
People
Comprehensive health promotion programs for all people where they work, live and play
Babies at home or in child care 21,645,000
Children 5-17 in school 54,109,000
Young adults 18-24 * 30,904,000
Working age 25-64 165,104,000 Retirement age 65+ 40,211,000
total 311,973,000
* enrolled in college: 19.764 million
Health Promotion Funding for Schools and Colleges
K-12 Schools: $10,821,800,000/year (54,109,000 kids)
Colleges $3,952,000,000/year (19,764,000 students)
Where do people receive their coverage (post ACA)
Employers: # of employees # of dependents total people
1-99 w/insurance: 28,659,568 20,781,173 49,440,741
1-99 w/o insurance: 13,486,856 9,779,376 23,266,232
100 + self insured: 78,757,127 57,107,123 135,864,250
sub total 120,903,551 87,667,671 208,571,222
CHIP 5,085,107
Medicaid 58,106,000
Medicare 40,211,000
sub total 103,402,107
total 311,973,329
How Many Good Jobs Will We Create?
$60.4 billion in new revenue for health promotion venders
$21.1 billion in new wages (35% of revenues)
280,000 new health promotion jobs at $75,000/job including benefits
$4,540,118,975innewstateincometaxrevenues
$22,530,806,666innewfederalincometaxrevenues
Sources of Funding • Employers:
– Self insured: $27,172,849,956 for 135,864,250 employees and dependents – Small w/insurance: $4,944,074,084 for 50% of the cost for 49,440,741
employees and dependents – Small w/no insurance: $2,326,623,180 for 50% of the cost for 23,266,232
employees and dependents • Insurance companies
– Small employers w/insurance $4,944,074,084 for 50% of the cost for 49,440,741 employees and dependents
• State governments: – Medicaid: $4,532,268,000 for 39% of the cost for 58,106,000 recipients
• Federal government – Small employers w/no insurance $2,326,623,180 for 50% of the cost for
23,266,232 employees and dependents of – SCHIP: $1,017,021,400 for 5,085,107 children enrolled – Medicaid: $7,088,932,000 for 61% of the cost for 58,106,000 recipients – Medicare: $8,042,200,000 for 40,211,000 recipients
Funding May Pay for Itself • Employers:
– Self insured (100+): Add to employee health plan premium short term, reduced medical costs by year 2 or 3 and reduced absenteeism (Baicker meta-analysis)
– Small (1-99) w/insurance: Reduced absenteeism (Baicker meta-analysis) + 50% insurance company offset
– Small (1-99) w/no insurance: Reduced absenteeism (Baicker meta-analysis)+ 50% federal offset
• Insurance companies – Cover with increased health plan premium short term, reduce medical costs year
2 or 3 (Baicker meta-analysis)) • State governments:
– $4,532,268,000 offset by$4,540,118,975 in new state income tax revenues from growth of health promotion businesses and taxes on increased employer profits from reduced medical cost. Annual surplus: $7,850,975 .
• Federal government – $16,148,153,400 off set by $22,530,806,666 in new federal income tax revenues
from growth of health promotion businesses and taxes on increased employer profits from reduced medical cost. Annual surplus: $6,382,653,266.
Sources of Funding (summary) Funders
Employers Employers Insurance State governement
Federal government
Federal government total
Employers: 1-99 w/insurance: $4,944,074,084 $4,944,074,084 $9,888,148,168
1-99 w/o insurance: $2,326,623,180 $2,326,623,180 $4,653,246,359
100 + self insured: $27,172,849,956 $27,172,849,956
sub total $27,172,849,956 $7,270,697,264 $4,944,074,084 $0 $2,326,623,180 $0 $41,714,244,483
CHIP $1,017,021,400 $1,017,021,400 Medicaid (Federal share: 61%) $4,532,268,000 $7,088,932,000 $11,621,200,000
Medicare $8,042,200,000 $8,042,200,000
sub total $0 $0 $0 $4,532,268,000 $0 $16,148,153,400 $20,680,421,400
total $27,172,849,956 $7,270,697,264 $4,944,074,084 $4,532,268,000 $2,326,623,180 $16,148,153,400 $62,394,665,883
Sources of Funding (detail, thousand $’s) Funders
Employers Employers Insurance State governement
Federal government
Federal government total
Employers: # of employees
# of dependents total people $200/per $100/per $100/per $200/per $100/per $200/per
1-99 w/insurance: 28,659,568 20,781,173 49,440,741 $4,944,074 $4,944,074 $9,888,148
1-99 w/o insurance: 13,486,856 9,779,376 23,266,232 $2,326,623 $2,326,623 $4,653,246
100 + self insured: 78,757,127 57,107,123 135,864,250 $27,172,849 $27,172,849
sub total 120,903,551 87,667,671 208,571,222 $27,172,849 $7,270,697 $4,944,074 $0 $2,326,623 $0 $41,714,244
41,714,244,483
CHIP 5,085,107 $1,017,021 $1,017,021
Medicaid (Federal share: 61%) 58,106,000 $4,532,268 $7,088,932 $11,621,200
Medicare 40,211,000 $8,042,200 $8,042,200
sub total 103,402,107 $0 $0 $0 $4,532,268 $0 $16,148,153 $20,680,421
total 311,973,329 $27,172,849 $7,270,697 $4,944,074 $4,532,268 $2,326,623 $16,148,153 $62,394,665
New Federal Tax Revenues (billions)
Increased Profits
Corporate Income tax
Social Security tax Medicare tax
individual Income tax Total
Taxable revenue Rates: 10% 35% 27.7% 12.40% 2.90% 20.00% Employer medical cost savings $48.36 $13.40 New health promotion vender revenue $60.39 $6.0, $21.14 $1.67 $2.62 $.61 $4.22
New federal income tax receipts $15.07 $2.62 $.61 $4.22 $22.53
New federal spending on health promotion
$16.15
Net federal surplus
$6.38
State Corporate
Income tax
State individual
Income tax Total
New taxable revenues Rates: 10% 35% 6.5% 4.75% Employer medical cost savings $48.36 $48.36 $3.14 New health promotion vender revenue* $60.39 $6.04 $21.14 $.398 $1.00
New state income tax receipts $3.53 $1.00 $4.54 Total State spending on health promotion $4.53 Net State surplus
$.00785
New State Tax Revenues (billions)
*Assumesexis\ngrevenuesof$2billion
Additional Savings to Governments Through Reduced Medical Costs from Employee Wellness Programs
Government Civilian Employees Employees Dependents Total Lives Savings
Federal 2,823,777 2,047,533 4,871,310 $1,948,523,814
State 4,399,190 3,189,871 7,589,061 $3,035,624,441
Local 12,407,919 8,997,034 21,404,953 $8,561,981,222
Reduce Growth of Medical Spending
• Projected growth rate – 1.7% excess above inflation 2012-2021 – Decrease linearly from 1.7% to 0% excess 2022-2085
• Projected inflation – 2.5% for consumer goods and services – “For its benchmark, CBO projects that over the 2021–2085 period, the
GDP deflator will increase 0.3 percentage points less per year, on average, than the consumer price indexes will—about the same differential that CBOprojects for the years through 2021.” p24 CBO
• NPV 1% lower increase (2.7% discount rate) – 15 years: 32.6% – 16 years: 48.9%
receipts 5% 10% 15% 20% 25% 0.3
othertaxes 31 31 31 31 31 31 31
corporatetaxes 29 29 29 29 29 29 29
SStaxes 132 139 145 152 158 165 172 Personalincometax 137 144 158 182 218 273 355
total 329 342 363 394 437 498 586
change 13 34 65 108 169 257
16.32%
spending
other 139 139 139 139 139 139 139
social security 110 105 99 94 88 83 77
Medicare, etc 280 266 252 238 224 210 196
current 11
540 510 490 471 451 432 412
change 20 39 59 78 98 117
deficit 211 167 127 77 14 -66
Social Security Savings
Positive Progress
• Health Promotion Advocates, a not profit advocacy group created to integrate health promotion into national health policy has adopted the concept as their core advocacy effort.
• The Art and Science of Health Promotion Conference has agreed to devote one educational track of up to eight sessions to focus on this effort at its March 18-22, 2013 conference to be held in Hilton Head Island, South Carolina.
• Preliminary conversations have been held with economists who study the link between health, medical care costs, ability to work, and federal spending.
• Preliminary conversations have been held with employer groups, health insurance trade groups, conservative and progressive think tanks and Congressional offices.
Next steps • Refine our program paradigm…from individual organizations to a
network of organizations making up a community
• Refine our analytic models…expand unit of analysis from organization to nation and outcome financial measures from medical cost containment and productivity to Medicare, Medicaid and Social Security spending and state and federal tax revenue
• Rally support – We the people – Employers – Insurance companies – CMS – Congress and the White House
Important Next Steps • General Exposure. Increase the number of people who are intrigued by
this concept and will advocate for it.
• Develop economic models to test the hypothesis that improving health will reduce spending on Medicare, Medicaid and Social Security and
increase tax revenues.
• Refine the scope and operational protocols of the consolidator function.
• Get feedback from think tanks, advocacy organizations, and employer
and health insurance groups. • Get feedback from the public health community.
What do we need to do to engage YOU?
How do we rally support without
creating polarizing camps?
How would you like to help? • Refining the message
• Refining the economic models
• Refining the program delivery strategy
• Spreading the word • Engaging partners
– Employers – Health insurance companies – CMS – Congress – White House – Think Tanks
Can We Reduce Our Federal Deficit and Create Jobs by Making
the Healthy Choice the Easiest Choice?
66