Embargoed Until:
September 01, 2009
12:01 a.m. Eastern Time



Christopher Fleming

Current Methods Of Estimating The Cost Of Federal Health Initiatives May Underestimate The Impact Of Efforts To Combat Chronic Disease

Using Example Of Type 2 Diabetes, Researchers Argue For The Use Of Epidemiological Models And Longer Time Horizons In "Scoring" Interventions Addressing Chronic Illness

Bethesda, MD -- Current methods used to estimate the costs of federal health initiatives may not capture the full impact of steps to prevent and manage chronic disease, according to a study published today on the Health Affairs Web site.

The effects of prevention and treatment interventions on health care costs and the federal budget have been primary points of contention in the ongoing debate over federal health reform legislation. The new study, funded by the National Changing Diabetes Program at Novo Nordisk, Inc., suggests that well-designed interventions dealing with chronic illness could be more cost-effective than projected in some estimates to date.

The study authors present a new epidemiologically based model that projects federal costs for type 2 diabetes under different policy options. They argue that this model, and similar models for other chronic diseases such as heart disease, could be used to provide more accurate estimates of the long-term spending associated with diabetes treatment interventions. Currently the Congressional Budget Office (CBO) -- which estimates or "scores" the costs of federal programs for Congress -- and the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) -- which projects Medicare costs on behalf of the administration -- rely heavily on health economic or actuarial models. These models work well for most health care policies, but cannot capture the changes in disease progression found in a chronic disease like diabetes.

"Although both the CBO and the CMS track closely the literature relevant to their projection assumptions, to our knowledge neither agency has yet built a forecasting approach for any chronic condition or disease that uses reliable epidemiological data to project expected health and cost effects from alternative policy scenarios," explain Elbert Huang, an assistant professor of medicine at the University of Chicago School of Medicine, and coauthors.

The researchers also argue that the ten-year budget window typically used by Congress may not be long enough to accurately assess the effects of many interventions addressing chronic disease. "For many chronic illnesses, and in the case of diabetes in particular, complications from the disease may not show up for many years. Thus, cost estimates covering only ten years may capture the up-front costs of prevention and disease management efforts but not the long-term health and economic benefits of avoiding future complications," said coauthor Michael O'Grady, a senior fellow at NORC in Bethesda, Maryland and principal of O'Grady Health Policy LLC. As an example, over a 25-year period, a diabetes management and prevention program modeled by Huang, O'Grady, and coauthors yielded savings for those age 24-30 when they entered the program, but the program resulted in an increase in net costs for this group when measured over only a 10-year period.

Huang, O'Grady, and coauthors recommend giving congressional leaders the authority to request 25-year cost projections from CBO for legislative provisions aimed at producing long-term health status improvements. The researchers also propose modifying congressional "paygo" rules which require legislation to be at least deficit-neutral over a ten-year period. "Several approaches might be considered for doing this, such as using an average cost for twenty-five years as the yearly costs incorporated into the ‘paygo' ten-year test. This alternative budget process should be available only if the Democratic and Republican leaders of the [House and Senate Budget Committees] agree to it," write Huang, O'Grady, and coauthors Anirban Basu of the University of Chicago School of Medicine and James Capretta of Civic Enterprises LLC.

After the embargo lifts, you can read the article by Huang and coauthors at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w978


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.


©2009 Project HOPE–The People-to-People Health Foundation, Inc.