logo

Helping People Find the Best Medicare Insurance
A fee-only financial advisor

1-877-236-7710

Contact us by e-mail

 
Managing Medicare's Costs

Wellness and disability

Last year just over three million people took advantage of Medicare’s free wellness benefit, a number that represented only 12% of Medicare fee-for-service enrollees. Some skeptics question whether the people who used this benefit were the ones who really needed it. That’s because wellness programs typically attract people who are healthy. And that in turn creates challenges for researchers trying to measure a program’s effectiveness.

If a company’s health plan includes free gym memberships as part of its wellness program, people who sign up will likely be the same ones who regularly exercise. Couch potatoes will be less inclined to enroll. Some early studies touting the benefits of wellness programs failed to take these tendencies into account.

The study data would show that one year after a company’s new wellness program started, participants had lower rates of obesity, diabetes, and medical costs than those who did not participate. Often overlooked was the fact that the people who enrolled were the healthiest at the outset and would be expected to have the lowest costs.

After those early measurement attempts were criticized, however, randomized studies became the norm. They have pretty much answered any questions about the potential effectiveness of a well-designed wellness program that focuses on on exercise, nutrition, or smoking cessation. Last year a policy brief in the journal Health Affairs said that an analysis of 36 peer-reviewed studies of wellness programs found that employer medical costs fell $3.27 for each dollar spent and that paid absence costs dropped by an average of $2.73 per dollar spent.

In July the Rand Corporation published a much larger study. This 174-page research report summarized various kinds of workplace wellness programs in companies with more than 50 workers. Among other things, the researchers analyzed a database of medical claims from more than 100 employers, comparing the results of wellness program participants and similarly matched non-participants.

They concluded that people in the programs had “statistically significant and clinically meaningful” improvements in exercise frequency, smoking behavior, and weight control, but not in cholesterol control. Since the researchers had access to four years of medical records, they were able to show that additional years of participation in the programs resulted in greater improvements.

Even though wellness programs are popular among employers, they are less so among workers. To encourage participation, companies often provide premium discounts to those who enroll. According to the Health Affairs policy brief, roughly one-half of large companies currently use financial rewards and penalties to encourage participation or are planning to do so in the next three to five years. Still, only 46% of workers enroll.

Convinced that wellness can save money for the government, Congress has passed laws to widen the programs’ appeal. For Medicare in particular, the potential savings are sizable. Its net healthcare costs are reduced when people live longer if those people remain free of disabling illness. In 2009, eight of the ten costliest Medicare patients were disabled beneficiaries who were not yet age 65, according to a Wall Street Journal article. Medicare spends more for one or two years of someone’s serious illness than it does for a decade of a healthy senior’s life.

Examples of the possible savings can be seen in exercise and nutrition programs to reduce obesity. Medicare will spend $149,000 during the remaining lifetime of an obese 70-year-old, which is 40% more than it will spend for a same-age person of normal weight. What’s surprising is that there’s little difference in life expectancy between the obese 70-year-old and the normal-weight one.

But the obese 70-year-old will have three fewer years of disability-free living than one whose weight is normal, according to a 2005 Health Affairs study by Darius Lakdawalla and other Rand researchers using Medicare Current Beneficiary Survey data. When disability is postponed, Medicare typically saves money.

While Medicare saves money when people live long, healthy lives, the same may not be true for individuals. It will depend on the type of coverage they have, and if most of their expenses are for premiums, they will pay more as they live longer regardless of how healthy they are. That’s especially true for seniors who have comprehensive employer and Medigap plans.

Still, even though they may not save money with the extra years free of disability, retirees who follow wellness lifestyles have better odds of postponing cardiovascular disease, dementia, and other serious ailments. Here the clinical evidence is strong. At least three fairly recent studies demonstrate the benefits of exercise: one was a 2010 article in JAMA Internal Medicine reported on a randomized study which found that 227 women who completed an 18-month exercise program showed significant improvements in bone mineral density, the number of falls experienced, and coronary risk factors.

The second was a controlled study published in the Archives of Internal Medicine (2010) that analyzed medical data of 3,400 seniors in Germany and found that the risk of dementia occurring during a two-year period was substantially lower for those who exercised. The third study, also published in the Archives of Internal Medicine, covered a 20-year period and found that women who exercised regularly at age 50 had a much greater chance at age 70 of “successful survival,” which the authors described as the absence of any of the ten most prevalent chronic diseases.

Chronic disease, in fact, is responsible for the bulk of Medicare’s costs. And the Centers for Disease Control says these diseases are largely preventable. They are also prevalent — according to the CDC, “seven of ten deaths are the result of chronic disease.”:http://www.cdc.gov/chronicdisease/overview/index.htmIt’s been estimated that 50% of Medicare beneficiaries are either diabetic or pre-diabetic, both of which are conditions that can be controlled in targeted wellness programs.

In 2009 Medicare began a three-year Senior Risk Reduction demonstration program that focused on wellness efforts and customized follow-up by health professionals. The final evaluation won’t be released until late this year, but an interim report found significant cost reductions for randomly assigned patients in one of the programs.

If the savings are substantial, it will put pressure on Congress to offer financial incentives to high-risk seniors if they will take part in wellness programs. The Affordable Care Act gave employers the right to reward and penalize workers to get them to participate in wellness program. In May the government released the rules that determine the size of the rewards and penalties that employer plans can offer. One example, described in a New York Times article, is that employers can give a 50% premium reward to workers in a wellness program designed to reduce tobacco use.

Medicare’s free annual wellness visit is one piece of the puzzle. It’s unusual in that, except perhaps for a blood pressure reading and measurement of height and weight, it does not involve an exam or treatment. Instead, it includes a discussion with your physician about your health, including your family medical history, your risk factors, preventive tests you may need, and early signs you may have some cognitive impairment. This kind of detailed and personalized health advice is usually not given during a primary care physician’s routine office visit. Here is Medicare’s explanation of the wellness benefit. ◊◊

Categories

© 2010-2018 Dover Healthcare Planning, LLC | Contact Us

Site by COPY & DESIGN