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Can We Reduce Our Federal Deficit and Create Jobs by Making the Healthy Choice the Easiest Choice? with Michael P. O’Donnell, PhD, MBA, MPH and Mari Ryan, MBA, MHP, CWWPC
 

Can We Reduce Our Federal Deficit and Create Jobs by Making the Healthy Choice the Easiest Choice? with Michael P. O’Donnell, PhD, MBA, MPH and Mari Ryan, MBA, MHP, CWWPC

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    Can We Reduce Our Federal Deficit and Create Jobs by Making the Healthy Choice the Easiest Choice? with Michael P. O’Donnell, PhD, MBA, MPH and Mari Ryan, MBA, MHP, CWWPC Can We Reduce Our Federal Deficit and Create Jobs by Making the Healthy Choice the Easiest Choice? with Michael P. O’Donnell, PhD, MBA, MPH and Mari Ryan, MBA, MHP, CWWPC Presentation Transcript

    • Can We Reduce Our FederalDeficit and Create Jobs by Making the Healthy Choice the Easiest Choice?
    • PresentersModeratorMari Ryan, MBACEO, Advancing WellnessMember, Board of Directors, Health Promotion AdvocatesSpeakerMichael P. ODonnell, PhD, MBA, MPHEditor in Chief and President, American Journal of Health PromotionMember, 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 GDPSource:
Congressional
Budget
Office,
2012

    • CBO Spending ProjectionsExtended 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 (Note: spending would be even higher if Affordable Care Act is ruled unconstitutional or repealed)•  Federal spending in areas beyond health care, social security and interest will reach historically low levels, but not as low.Financial Cliff: scheduled tax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 GDPSource:
Congressional
Budget
Office,
2012

    • Mandatory Federal Spending on Health Care, by Category, Under CBO’s Extended-Baseline Scenario Percentage of GDPSource:
Congressional
Budget
Office,
2012

    • Spending for Social Security Under CBO’sLong-Term Budget Scenarios Percentage of GDP 8
    • Other Federal Spending Under CBO’s Long-Term Budget Scenarios Percentage of GDPSource:
Congressional
Budget
Office,
2012

    • Federal Debt Held by the Public Under CBO’s Long- Term Budget Scenarios Through 2085 Percentage of GDPSource:
Congressional
Budget
Office,
2012

    • Causes of Short Term and Long Term Debt are DifferentShort 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
    • 5‐15
 Annualized
Spending
Increases
by
President
 Note:
All
start
with
President’s
1st
 budget
which
is
2nd
year
in
office

    • Back
to
Long
Term

    • A crisis that will causeour nation’s economy to implode
    • Primary Spending and Revenues, by Category, Under CBO’s Long-Term Budget Scenarios Through 2085 Percentage of GDPSource:
Congressional
Budget
Office,
2012

    • What are the root health related causes?
    • Underlying health related causes Lifestyle Medicaid
Costs
 Medicaid
Costs
 Chronic Disease Medicare
Costs
 Medicare
Costs
 Social
Security
Costs
 Social
Security
Costs
 Aging Society Low
tax
Revenue
 Low
Tax
Revenue
 Poverty & Inequality Yikes!
Source:
O’Donnell,
AJHP
July,
2012

    • Adults Meeting Cardiovascular Health Metrics NHANES 1988-1994, 1999-2004, and 2005-2010. 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%. Yang, Q. et al. JAMA 2012;307:1273-1283
    • Leading Causes of Death: Chronic Diseases (US, 2010 Preliminary) #
 %
 24.15%
 Heart
disease
 595,444
 23.27%
 Cancer
 573,855
 5.24%
 Stroke
 129,180
 5.59%
 COPH
 137,789
 4.79%
 Accidents
 118,043
 3.38%
 Alzheimer’s
 83,308
 2.79%
 Diabetes
 68,905
 2.03%
 Flu
&
pneumonia
 50,003
 2.05%
 Nephris
and
related
 50,472
 1.53%
 Suicide
 37,793
Naonal
Vital
Stascs
Reports,
Vol.
60,
No.
4,
January,
2012


    • Most Medical Spending is Tied to Chronic Diseases All
spending…
 Medicaid
 Medicare
 83%

 96%
 Share
spent
on
pa?ents
with
chronic
diseases
Source:
Partnership
for
Soluons.
Chronic
Condions:
Making
the
Case
for
Ongoing
Care.
September
2004
Update.
Available
at:
hap:// 21
www.rwjf.org/files/research/Chronic%20Condions%20Chartbook%209‐2004.ppt.
Accessed
on
April
17,
2007.

    • The Population Age 65 or Older as a Percentage of the Population Ages 20 to 64 Percent 23Source:
Congressional
Budget
Office,
2012

    • Can We Reduce Our FederalDeficit and Create Jobs by Making the Healthy Choice the Easiest Choice?
    • ROI Workplace Health Promotion Programs Meta-analysis 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 2.73Source:
Baicker
K,
Cutler
D,
Song
Z,
Health
Affairs,
Feb
2010

    • 2012 Meta-Evaluation Findings: Overview Averages & Totals Study Parameter (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‐Evaluaon
of
Economic
Return
Studies
for
Worksite
Health
Promoon:
2012
Update

Am
J
Health
Promot
26,4
    • Progression of Disability by Age University of Pennsylvania Study 1986-2005w/60%
of
cohort
dead
‐delay
disability
10
years
‐delay
death
3.5
years
‐compress
disability
6.5
years

 Fries
JF,et
al.
J
Aging
Res
2011,
Ar/cle
ID
261702.


    • 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 CalculationsIf 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 improvinghealth provides the best strategyto preserve the fiscal solvency of our nation how do we improve health?
    • Make the healthychoice the easiest choice!
    • Priorities1.  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 inequality2.  Focus mission of federal departments3.  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:
Fair
Society
Healthy
Lives,
Instute
for
Health
Equity,
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 timeseach day with the most effective strategies where they work,shop, study, worship and relax.
    • Funding
from
Organizaons
that
Benefit
to
Organizaons
that
Can
Engage
People
 in
Effecve
Programs

 State
 Employers
 US
Treasury
 Insurers
 CMS
 Medicaid
 Hospitals
 Work places
 ? &
Clinics
 Clubs
 Child
 K‐12
 Parks
 care
 Faith
 Schools
 Groups
 Colleges
 Fitness
 Health
 Restaurants
 People
 Centers
 promoon
 &
grocers
 providers
Source:
O’Donnell,
AJHP,
July,
2012

    • Definition of Health PromotionHealth 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. ODonnell (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 AwarenessEnhance 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
    • Funding
from
Organizaons
that
Benefit
to
Organizaons
that
Can
Engage
People
 in
Effecve
Programs

 State
 Employers
 US
Treasury
 Insurers
 CMS
 Medicaid
 $2.36 billion $4.5 billion $34.4 billion $16.1 billion $4.9 billion $20.7 billion Hospitals
 ? $24.1 billion Work &
Clinics
 places
 $4.3 billion $10.8 billion Clubs
 Child
 K‐12
 Parks
 care
 Faith
 Schools
 $3.95 billion Groups
 Colleges
 Fitness
 Health
 Restaurants
 People
 Centers
 promoon
 &
grocers
 providers
Michael
P.
ODonnell,
PhD,
MBA,
MPH,2012

    • Comprehensive health promotion programsfor 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 CollegesK-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 people1-99 w/insurance: 28,659,568 20,781,173 49,440,7411-99 w/o insurance: 13,486,856 9,779,376 23,266,232100 + self insured: 78,757,127 57,107,123 135,864,250 sub total 120,903,551 87,667,671 208,571,222CHIP 5,085,107Medicaid 58,106,000Medicare 40,211,000 sub total 103,402,107total 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$4,540,118,975
in
new
state
 $22,530,806,666
in
new
federal
income
tax
revenues

 income
tax
revenues


    • 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 State Federal Federal Employers Employers Insurance governement government government totalEmployers:1-99 w/insurance: $4,944,074,084 $4,944,074,084 $9,888,148,1681-99 w/oinsurance: $2,326,623,180 $2,326,623,180 $4,653,246,359100 + selfinsured: $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 $41,714,244,483CHIP $1,017,021,400 $1,017,021,400Medicaid(Federalshare: 61%) $4,532,268,000 $7,088,932,000 $11,621,200,000Medicare $8,042,200,000 $8,042,200,000 sub total $0 $0 $0 $4,532,268,000 $0 $16,148,153,400 $20,680,421,400total $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 Federal State Federal governme Employers Employers Insurance governement government nt total # of # ofEmployers: employees dependents total people $200/per $100/per $100/per $200/per $100/per $200/per1-99 w/insurance: 28,659,568 20,781,173 49,440,741 $4,944,074 $4,944,074 $9,888,1481-99 w/oinsurance: 13,486,856 9,779,376 23,266,232 $2,326,623 $2,326,623 $4,653,246100 + selfinsured: 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 41,714,244,483CHIP 5,085,107 $1,017,021 $1,017,021Medicaid(Federalshare: 61%) 58,106,000 $4,532,268 $7,088,932 $11,621,200Medicare 40,211,000 $8,042,200 $8,042,200 sub total 103,402,107 $0 $0 $0 $4,532,268 $0 $16,148,153 $20,680,421total 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 Corporate Social individual Profits Income tax Security tax Medicare tax Income tax TotalTaxablerevenue Rates: 10% 35% 27.7% 12.40% 2.90% 20.00%Employermedical costsavings $48.36 $13.40New healthpromotionvenderrevenue $60.39 $6.0, $21.14 $1.67 $2.62 $.61 $4.22New federalincome taxreceipts $15.07 $2.62 $.61 $4.22 $22.53New federal spending $16.15on health promotionNetfederal $6.38surplus
    • New State Tax Revenues (billions) State State Corporate individual Income tax Income tax TotalNew taxablerevenues Rates: 10% 35% 6.5% 4.75%Employer medicalcost savings $48.36 $48.36 $3.14New healthpromotion venderrevenue* $60.39 $6.04 $21.14 $.398 $1.00New state incometax receipts $3.53 $1.00 $4.54Total State spending onhealth promotion $4.53Net State $.00785surplus *Assumes
exisng
revenues
of
$2
billion

    • Additional Savings to Governments Through Reduced Medical Costs from Employee Wellness ProgramsGovernmentCivilianEmployees Employees Dependents Total Lives SavingsFederal 2,823,777 2,047,533 4,871,310 $1,948,523,814State 4,399,190 3,189,871 7,589,061 $3,035,624,441Local 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%
    • Social Security Savingsreceipts 5% 10% 15% 20% 25% 0.3other
taxes
 31 31 31 31 31 31 31corporate
taxes
 29 29 29 29 29 29 29SS
taxes
 132 139 145 152 158 165 172Personal
income
tax
 137 144 158 182 218 273 355total
 329 342 363 394 437 498 586change
 13 34 65 108 169 257 16.32%spendingother 139 139 139 139 139 139 139social security 110 105 99 94 88 83 77Medicare, etc 280 266 252 238 224 210 196current 11 540 510 490 471 451 432 412change 20 39 59 78 98 117deficit 211 167 127 77 14 -66
    • 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 todo to engage YOU?
    • How do we rally support withoutcreating 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
    • Help Us•  Send an email with your ideasvolunteers@healthpromotionadvocates.org
    • Can We Reduce Our FederalDeficit and Create Jobs by Making the Healthy Choice the Easiest Choice?
    • 66