Spending on health care in America has skyrocketed over the past 40 years. In 2010, the United States spent an estimated $2.47 trillion on health care. This staggering figure equates to every American spending more than $8,000 on health care. The total spending represented nearly 17.4 percent of the US gross domestic product (GDP). By comparison, in 1980 the share of GDP devoted to health care was only 8.8 percent. This equated to approximately $1,000 per person spending on health care in 1980. In 1970, it was $352 per person. Even when adjusted for inflation this rate of increase in health care spending demonstrates that the US is in the midst of a health care fiscal crisis, and it is getting worse every year.
Numerous chronic diseases drive a disproportionate share of these health care costs at alarming annual rates. To name a few:
- Heart disease and stroke: $432 billion per year
- Diabetes: $174 billion per year
- Lung disease: $154 billion per year
- Depression: $77 billion per year
What is even more astounding is that 10 percent of the US population consumes nearly 70 percent of the health care dollar. That’s right – one out of every ten Americans consumes .70 cents of each $1 spent on health care. This ratio of spending is consistent across employer health plans as well as the Medicare and Medicaid programs.
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The reality that so few citizens consume such a disproportionate share of the health care costs seems outrageous. America should not attack the 10 percent of Americans that are so unhealthy though, because the “blame game” accomplishes nothing. So many societal influences encourage poor health. Unhealthy food is cheap and convenient. Many Americans are working harder and longer hours than ever before, making it more difficult to reduce stress and to find time to exercise. The US health care system does not focus on wellness and prevention of disease. At some point, however, excuses must be shoved aside.
The opportunity to bring down health care costs by focusing on this 10 percent population group is clear. Reducing expenses amongst the 10 percent group by only 1 percent gives the country a seven times return on its investment. Fear that health care spending cannot be controlled should be set aside based on this 10 percent/70 percent reality. America can save substantial costs by focusing on a small percent of its population.
Both the public and private sectors are finally waking up to the fact that health care reform initiatives must focus on chronic disease prevention and management programs aimed at the 10 percent group. Employers are actively forming new workforce health care plans, named Employer Accountable Care Organizations (EACOs). EACOs design progressive plans that focus on the workforce’s chronic health conditions so that people receive the tools and support to better manage their diseases. Employers’ costs go down and employees’ health improves.
If diabetes is the highest cost disease within a company’s workforce, the EACO designs benefits, incentives and disincentives around lifestyle and medical systems to effectively prevent or manage this condition. Employers contract with physicians, dieticians and life coaches, who get more engaged toward the prevention and management side of the disease. Case managers call employees when they fail to refill insulin prescriptions. Companies develop progressive behavioral health programs to alter human behaviors that lead to diabetes, including exercise, diet and nutrition plans.
Smart business executives realize that their workforce is the company’s most important asset. Their people should be treated and encouraged as such. Effective EACO programs will foster a workplace environment where the mind, body and spirit are cradled to encourage a healthier workforce.
The Medicare and Medicaid programs are also getting more proactive and aggressive around chronic disease management and prevention. Government programs are partnering with private industry, where the private sector accepts more risk through receiving fixed or capitated payments from the government to care for the lives of high-risk beneficiaries. Health care providers create aggressive, preventative and proactive medical home models that focus on the 10 percent high-risk group. As patients get healthier, costs go down, and the government and private sectors share in the cost savings.
The future of health care is about prevention, wellness and proactive health management programs. The days of thinking that health care is primarily focused on treating sickness are over. Food as medicine will replace the “pill for every ill” mentality. Comprehensive health management will be the dominant practice moving forward.
Some fear that the corporate vested interests tied to an unhealthy America are too strong and powerful to allow these changes to occur. While the strength of vested interests can never be underestimated, the pendulum swing toward health and wellness has already moved. Momentum is early, but it is sustainable and clear. One by one, Fortune 500 companies are announcing movements in this direction. Smaller businesses are actively following suit. Aggressive government health management programs are growing regularly, too.
A critical mass can initiate change, even when opposing forces resist. Enough power within the private and public sectors have concluded that the 10 percent group deserve and demand attention, focus and dedication to bring down health care costs in America. EACOs and health management programs are the future. The upside benefits to helping the 10 percent are too great to ignore.
Note: Co-Authors David Houle and Jonathan Fleece outline the race to a healthy America in their newly acclaimed book, “The New Health Age: The Future of Health Care in America.”