On Monday, I started  a series on the health care reform legislation's cost measures, going beyond just health insurance and actually beginning to examine the potential impact on the cost of care. The first part in this series discussed bargaining incentives for insurance companies, community health centers and electronic medical records. Today, I want to look at the cost savings that may be realized in long term care, and the benefits of primary and preventive care, focusing on wellness and early detection.


In 2006, the average assisted living facility cost in the US a little more than $35,000, whereas a the average cost of a nursing home was more than twice as much, clocking in at over $75,000, over twice as much.  The average cost of a home health aide was $19 per hour. Of course, nursing home care is absolutely essential for many patients. But there are also patients who do not require the full range of services available in a nursing home, and many seniors would like to live a more independent life.

The health care bill gives states the choice to provide people on Medicaid long-term, in-home care.
Sec. 2401. Community First Choice Option. Establishes an optional Medicaid benefit through which States could offer community-based attendant services and supports to Medicaid beneficiaries with disabilities who would otherwise require the level of care offered in a hospital, nursing facility, or intermediate care facility for the mentally retarded.

Sec. 2402. Removal of barriers to providing home and community-based services. Removes barriers to providing HCBS by giving States the option to provide more types of HCBS through a State plan amendment to individuals with higher levels of need, rather than through a waiver, and to extend full Medicaid benefits to individuals receiving HCBS under a State plan amendment.
It is of course hard to quantify exactly how many people could benefit from this. But, consider this: Medicaid is the single largest spender on long term care, spending a full 49% of national expenditures on long term care. Medicare pays for another 20%. Medicaid and Medicare alone is responsible for nearly 70% of all long term care spending in this country. Bringing home health care and assisted living into better payment structures from Medicaid makes sense both in terms of improving the quality of life and for cost savings.

A crucial component in building savings into long term care and home care is investment in training professionals to provide those services. The Senate bill provides $10 million in funding for exactly that purpose over the next three years in section 5302.

The Senate bill also sets up a voluntary, national and public insurance program, called the Community Living Assistance Services and Support (CLASS) program, that people can buy into to pay for long term care - most commonly, home health care with benefits of no less than $50 a day (Section 8002). $50 a day might not seem like much, but it can bridge the gap for an elderly person at her home who needs assisted living care just for a few hours a day (remember that the national average for those services is about $20 an hour). But of course, you might ask, how is this a cost saving? Because these few hours of assisted living in one's own home can be the difference between an elderly person being home alone for three hours a day that relatives and friends cannot bridge, and being with somebody. It can mean someone in their own home gets assistance with bathing and dressing - which shouldn't take any more than a couple of hours, but done alone, runs the risk of injury, followed by the need for hospital and far more expensive medical care. In-home care, in essence, is preventive against those types of possibilities. I think that's why the AARP likes this.

So at the end of the day, investment in in-home and long term care improves lives, reduces costs both in nursing home care costs and hospital costs, and the improved health may well result in less usage of prescription drugs and medical devices. Think of it this way - every time a long term care facility or an in-home care provider prevents an elderly person from slipping and falling, that's one less hospital/clinical bill, one less prescription, maybe even one less prescription for a medical device like a wheelchair.


Primary and preventive care go hand in hand. On this note, I would like to remind everyone that under health reform, once insured, preventive care - that is, your regular checkups and other recommended preventative care - is free (i.e. no copay).
Sec. 2713. Coverage of preventive health services. Requires all plans to cover preventive services and immunizations recommended by the U.S. Preventive Services Task Force and the CDC, certain child preventive services recommended by the Health Resources and Services Administration (HRSA), and women’s preventive care and screening recommended by HRSA, without any cost-sharing.
In addition, section 2705 gives employers the ability to offer employees wellness programs and reduce their premiums by up to 30% upon participation. Lest we forget, the Community Health Centers, in massively expanded form, will be able to provide primary and preventive care to even those that are not insured, bringing, in Sen. Bernie Sanders' words, a "revolution" in primary care.

There is a whole lot of ways for preventive care to reduce costs in our system. First, with children.
A study conducted by the American Academy of Pediatrics (AAP) found that it would have cost $4.3 billion to provide comprehensive clinical preventive services to all 10- to 24-year olds in 1998. If the delivery of comprehensive clinical preventive services (as defined by the AAP) prevented 1% of the $700 billion in costs associated with preventable adolescent injuries, a hypothetical net savings of $2.7 billion would result.
Of course, this bill doesn't cover all children - but it covers a heck of a lot. It forces insurance companies to let people under 27 stay on their parents' plan. The President already signed into law a great expansion of SCHIP. The expansion of coverage overall will also cover a great deal of children. And here we're just talking about injuries. In 1998 - that's 12 years ago - there were $700 billion in costs associated with preventable injuries. I wonder what the figures are today.

But aren't kids a bunch of rambunctious brats that don't listen to anyone anyway? Does this kind of prevention work with kids? Yes, it does.
Several studies have demonstrated cost-savings associated with preventive care for publicly-insured children. For example, Medicaid-enrolled children who are up-to-date on their well-child checkups through 2 years of age are 48% less likely to experience an avoidable hospitalization.
Now let's move on to some other figures on costs of preventable illnesses, as well as cost savings that could result from early detection. In Connecticut, just preventable hospitalizations cost the health care system $450 million. If it's typical of the overall problem in the US, preventable hospitalization costs overall health care system almost $40 billion. Now of course, many people who had these cases were already insured, even adequately insured. But even if comprehensive coverage, electronic medical records and alerts (reminding patients to follow physician instructions), and regular screening and checkups can reduce that cost by just 20% or even 10%, that would be some significant savings.

But preventable hospitalization may be small potatoes compared to what could be saved from prevention and early detection of chronic illnesses. Some estimates blame chronic illnesses for 75% of our overall health care costs - and these may be both preventable and detectable at an early stage and treatable for a far smaller cost than if detected at later stages. If prevented or detected early, the savings can range from $14,000 per year per person affected with these illnesses to as much $450,000 per year per person compared to what would have to otherwise be spent. In other words, a system that is actually about health care rather than just disease care can result in tremendous savings.

Will all those savings materialize from the current legislation? Of course not. But the measure of the starting point of cost reduction is if the legislation takes a serious crack at any of it, and I believe the current legislation does - not just by investments but by focusing more on prevention and early detection, as well as by taking specific steps on chronic disease. Title IV of the Senate bill is actually dedicated entirely to this. In it we find the following:
  • Sets up a national council to implement a national strategy of prevention and early detection of chronic illnesses
  • Authorizes $7 billion from now till 2015, and $2 billion year after that for the a Prevention and Public Health Fund.
  • Increases coordination between and expands the efforts of the US Prevention Services Task Force and the Community Preventive Services Task force.
  • Directs Secretary of HHS to convene a public/private partnership for an outreach and education campaign and directs the Secretary to conduct a national media campaign on prevention and wellness.
The key to preventing illnesses and detecting diseases early is both to expand insurance so that people have screening, expand health centers so people who cannot buy insurance can still get screening and medical primary care, as well as to wage a campaign to change people's attitudes into focusing on prevention and wellness. This bill takes a good crack at all of them. No, it won't solve all your problems. But this is a very good first step towards reining in the enormous costs of our health care system.

That ends it for today's post in the series. There will be at least one, more likely two more in this series. Please stay tuned.

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