Increasing Affordability and Expanding Services of Preventive Care under Medicare: A Means of Lowering the Cost of the U.S.

Health Care System Ruchi Shah Dr. Janet Gazely The College of New Jersey October 24, 2013

Dear Commissioner ODowd: The United States spends more than any other nation on health care, 16% of its gross domestic product, yet internationally, it is only ranked 37th by the World Health Organization in terms of effectiveness (Stange and Woolf 2008). This portion of the GDP that is allocated towards health care spending has risen by 2.4% every year since 1970 (KFF 2012). Accordingly, the U.S. also spends the most on health care per capita in the world- $8,402 per person added up to a grand total of $2.6 trillion in 2010 (KFF 2012). These statistics elucidate the alarming reality about the U.S. health care- a bigger budget and increased spending do not lead to better quality. In short, our current health care system is failing. At present, the U.S. health care system focuses primarily on intervention rather than preventive measures (Shih, Davis, Schoenbaum, et al.). Such an approach has resulted in 75% of U.S. health spending going towards treating chronic diseases, which causes 7 in 10 deaths annually (RWJF 2013). However, the onset of a majority of chronic diseases can be delayed and their progression can easily be limited through preventive care measures such as education about health behaviors and screening services (Clarke 2010). Yet, preventive care is extremely underutilized: less than 50% individuals over the age of 50 and less than 27% of individuals between the ages of 50 and 64 are up-to-date on their preventative health screenings and vaccinations (Crum 2013). Public opinion is also in consensus with this data as 0% of American voters answered a lot and 50% answered not much at all when asked how much emphasis was being placed on prevention in our current health care system (NHC). It is evident that the disproportionate cost of U.S. health care system is perpetuated by the lack of preventive care which results in widespread chronic conditions that financially drain the system. The incidence of chronic disease is especially high among the elderly demographic that is covered under Medicare. It is predicted that 60% of the population above the age of 65 will be managing at least one chronic condition in the near future (AMA 2012). Thus, preventive care covered under Medicare needs

to be addressed as means of managing the cost of U.S. health care and making the system more efficient as a whole. At present, preventive services are covered under the optional Part B of Medicare. Individuals are required to pay a monthly premium for Part B; in 2012 this premium was $99.99 (Medicare.gov 2012). An annual deductible also has to be paid before Medicare begins to pay its share; in 2012, the deductible was $140 (CMS.gov 2012). In addition to these fees, individuals must pay 20% of the cost of preventive services out of pocket. Part B only includes a one-time Welcome to Medicare visit during the first 12 months of enrollment. While these fees may seem necessary to Department of Health for the State of New Jersey, they are detrimental in the long run. There is minimal incentive for individuals to seek out preventive services due to the required out of pocket expenditure, and this contributes to the onset and progression of chronic conditions, because they are not detected and treated early on. In fact, 84% of American voters had themselves or a family member postpone a health care procedure and care due to cost and thus, if one change could be made to the U.S. health care system, 54% of American voters would control out-of-pocket costs (NHC). Furthermore, in adults over the age of 65, the risk of chronic illness increases every year. This demographic needs to remain up-to-date with their risk factors, but this cannot be achieved through the one-time Welcome visit. Such criteria highlights why 99% of Medicare funds are spent on the treatment of chronic diseases (PFCD). Part B of Medicare needs to offer greater access to individuals to seek out preventive care, because doing so will ultimately save the U.S. health care system millions of dollars. Such provisions were made under the Affordable Care Act, which was signed into law on March 23, 2010. Most preventive services have been made completely free of charge to Medicare beneficiaries and an Annual Wellness Visit to ones primary care provider has been added, also free of charge (Medicare Rights 2012). These changes not only enable the patient to maintain an up-to-date prevention plan, but also acquire the appropriate screenings and counseling to stick to their plan at no additional expense.

Implementation of these changes under the ACA has been successful. In 2012, over 34 million people covered under Medicare received at least one free service (Medicare Blog 2013). In August 2013 alone, over 18.9 million Americans received at least one free preventive service and over 1.2 million beneficiaries underwent a free Annual Wellness Visit (Medicare Blog 2013). Analysts have determined the total savings due to the additional provisions allotted to Medicare under the ACA will be $41 billion through 2016 (CMS.gov Report 2012). This data leaves no room for argument- the ACAs expansion of free preventive services dramatically reduces cost for both the U.S. health care system as a whole and the individual. However, the ACA could be expanding the types of preventive services offered under Medicare. Since many chronic conditions occur due to risky behaviors that can easily be avoided through education, there should be an education component offered as a type of preventive service (CMS.gov Report 2012). Although some may argue that such education would be provided by the physician during the Annual Wellness Visit, it would be insufficient and ineffective. In order for such education to result in a behavior change, it needs to be offered frequently and consistently. Implementation of such educational programs under Medicare could replicate the already existing Medicaid Incentives for Prevention of Chronic Disease Program that was implemented on January 1, 2011. In this program, states are provided grants to offer financial and non-financial incentives to enrollees who participate in programs that address the following prevention goals: tobaccos cessation, controlling or reducing weight, lowering cholesterol, lowering blood pressure, and avoiding the onset of diabetes or improving its management (Medicaid.gov). The U.S. has the most expensive health care system in the world and 75% of its budget is allocated towards the treating chronic illnesses of Medicare beneficiaries. While the ACA has reduced the cost of and expanded the types of preventive services offered under Part B of Medicare, it also needs to focus on implementing educational programs as a means of preventing chronic conditions that are consequences of risky behaviors.

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