An Unhealthy America: The Economic Burden of ... - Milken Institute

More documents

Recommendations

Info

An Unhealthy AmericaMilken InstituteVI: CONCLUSIONThis report quantifies the staggering cost for the national economy, and to employers, of failing to address the risingcosts of chronic disease. It differs from the majority of research, which generally addresses the costs of specific diseasesfor individuals, government programs, or society as a whole.While our focus on aggregate economic impact dictates a different methodological approach, our results are generallyconsistent with other published estimates for treatment expenditures and productivity losses. Our findings on the long-termimpacts of improvements in health are also consistent with the few published studies of this kind. A study by Murphyand Topel, for example, 94 found even more dramatic savings, concluding in 2003 that a 10 percent reduction in mortalityfrom heart disease would have a value of $5.5 trillion to current and future generations, while a 10 percent reduction inmortality from cancer would be worth $4.4 trillion.The clear implication of our findings is that good health is an investment in economic growth. The United States faces anincreasingly competitive global economy, and our national economic performance is closely tied to our ability to maintainthe best-educated, most highly trained, and healthiest work force. While it is well understood among policy-makersthat economic growth is dependent on investments in human capital, the importance of good health in maintaining acompetitive work force is frequently ignored. Better health leads to greater investments in education, resulting inhigher levels of human capital—which in turn causes wealth to increase in a virtuous cycle of economic growth.During the past twenty-five years, the United States has made remarkable progress in reducing death and disabilityattributable to many chronic diseases. Behavioral changes—especially the reduction in smoking—and early screeningand innovations in medical technology and interventions are responsible for the improvement. Yet much remains to beaccomplished to diminish the deleterious impacts on the quality and length of life.Our findings lead to the following observations:• Without action soon, aging of our population will lead to critically high rates of chronic disease.Despite reductions in cancer incidence and heart disease prevalence, the aging population will likely lead todramatic increases in these disease rates over the next two decades. Prevention and early intervention, however,can reduce disability and premature death rates. We project that as many as 40 million cases of chronic diseasecould potentially be avoided in the next twenty years.• The business cost of lost productivity is huge compared to the costs of treatment.In 2003 the United States spent $227.0 billion on the seven chronic diseases studied here. But after accounting forlost workdays and lowered employee productivity, the indirect impacts on employers and the economy ran anadditional $1.1 trillion. Behavioral changes, early intervention, and more effective management of existing diseasecan reduce the human suffering and costs. We could, in fact, reasonably expect within two decades to reduce theeconomic impact of these diseases by as much as $1.3 trillion annually—of which the lion’s share, $905.0 billion,would result from gains in worker productivity.94. Kevin Murphy and Robert Topel, “Diminishing Returns? The Costs and Benefits of Improving Health,” Perspectives inBiology and Medicine 46, no. 3 Supplement Summer (2003).[ 183 ]
An Unhealthy AmericaMilken Institute• Promoting better health is an investment in economic growth.Good health contributes to economic growth: we project that in 2050, with improved prevention and earlyintervention, real economic output could grow by 17.6 percent over baseline projections, or $5.7 trillion. Betterhealth leads to greater investments in education, resulting in higher levels of human capital—which in turn causewealth to increase in a virtuous cycle of economic growth. At the macroeconomic level, increased health, lowerchronic disease, and improved life expectancy raise the rates of return to a variety of investments. The result isfaster human and physical capital accumulation that ignites an explosion in knowledge and technology.With these observations in mind, we offer the following recommendations for change:• National health care expenditures should be reported for key chronic diseases.Significant gap exist in the country’s system of reporting health-care expenditures. While we have very goodinformation on spending by type of purchaser and by site of service, we do not track national spending by condition.Sources like the MEPS survey go a long distance in filling this gap, but there is a critical need for a new system ofnational health accounts that would help policy-makers assess the value we are receiving in return for our spending.We must develop a way to measure growth in treatment costs that simultaneously allows us to evaluate progressin improving treatment outcomes. Today such analysis requires a team of computer programmers to assemble; itshould be available in simple tables for the general public.• The incentives in the health-care system should promote prevention and early intervention.The health-care system, both public and private, must introduce incentives that encourage and reward preventionand early intervention. Most chronic diseases are highly preventable. Their shared risk factors suggest thatcoordinated prevention programs could have a major impact. Today our health-care system is a leader in providingworld-class care for people with acute illnesses. We need to focus our efforts on creating the same level of excellencein preventing and managing chronic disease.• As a nation, we need to renew our commitment to achieving a “healthy body weight.”Increasing obesity rates threaten to send treatment costs for diabetes and related conditions, such as heart diseaseand stroke, soaring over the next twenty years. We need a strong, long-term national commitment to promotehealth, wellness, and healthy body weight. Employers, insurers, governments, and communities all need to worktogether to achieve this. Much of the effort could be directed at educating consumers to change behaviors. If wecould reduce the rate of obesity over the next twenty years, we could likely lower annual health-care expendituresby $59.7 billion.There are important impacts on government and businesses. Medicare, the fastest-growing component of the federalbudget, threatens to widen the budget deficit to unacceptable levels unless changes are made. The impact on statebudgets is equally onerous: Medicaid falls behind prison expenditures for fastest-growing state spending category.Escalating health-care costs are eroding the ability of U.S. companies to compete against foreign firms. In many cases,foreign governments cover health costs, or U.S. competitors don’t bear the full costs of providing health-care coverage.Additionally, many U.S. firms provide health-insurance coverage to their retirees, which increases costs dramatically.Holding other factors constant, lower costs of health care permit foreign firms to offer lower prices for goods and services.[ 184 ]
Page 8:
An Unhealthy AmericaMilken Institut
Page 11 and 12:
iitime of the analysis show that th
Page 13 and 14:
Existing estimates of the economic
Page 16 and 17:
Page 18 and 19:
Page 20:
Page 23 and 24:
Page 25 and 26:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36:
Page 39 and 40:
Page 42 and 43:
Page 44:
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Page 58 and 59:
Page 60 and 61:
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147: An Unhealthy AmericaMilken Institut
Page 162: An Unhealthy AmericaMilken Institut
Page 246 and 247:
Page 248 and 249:
Page 250 and 251:
Page 252:
1250 Fourth Street • Santa Monica
show all

An Unhealthy America: The Economic Burden of ... - Milken Institute

Create successful ePaper yourself

Delete template?

Save as template?