Can We Reduce Our Federal Deficit and Create Jobs by Making the Healthy Choice the Easiest Choice?...

Can We Reduce Our Federal Deficit and Create Jobs by Making

the Healthy Choice the Easiest Choice?

Presenters

Moderator Mari Ryan, MBA CEO, Advancing Wellness Member, Board of Directors, Health Promotion Advocates

Speaker Michael P. O'Donnell, PhD, MBA, MPH Editor in Chief and President, American Journal of Health Promotion Member, 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 GDP

Source:CongressionalBudgetOffice,2012

CBO Spending Projections Extended 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 (Note: spending would be even higher if Affordable Care Act is ruled unconstitutional or repealed)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 GDP

Source:CongressionalBudgetOffice,2012

Mandatory Federal Spending on Health Care, by Category, Under CBO’s Extended-Baseline Scenario

Percentage of GDP

Source:CongressionalBudgetOffice,2012

8

Spending for Social Security Under CBO’s Long-Term Budget Scenarios

Percentage of GDP

Other Federal Spending Under CBO’s Long-Term Budget Scenarios

Percentage of GDP

Source:CongressionalBudgetOffice,2012

Federal Debt Held by the Public Under CBO’s Long-Term Budget Scenarios Through 2085

Percentage of GDP

Source:CongressionalBudgetOffice,2012

Causes of Short Term and Long Term Debt are Different

Short 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

Note:AllstartwithPresident’s1stbudgetwhichis2ndyearinoffice

5‐15AnnualizedSpendingIncreasesbyPresident

BacktoLongTerm

A crisis

that will cause

our nation’s economy to implode

Primary Spending and Revenues, by Category, Under CBO’s Long-Term Budget Scenarios Through 2085

Percentage of GDP

Source:CongressionalBudgetOffice,2012

What are the root health related

causes?

Underlying health related causes

MedicareCosts

MedicaidCosts

LowtaxRevenue

SocialSecurityCosts

Chronic Disease

Lifestyle

Poverty & Inequality

Aging Society

MedicaidCosts

MedicareCosts

SocialSecurityCosts

LowTaxRevenue

Yikes!

Source:O’Donnell,AJHPJuly,2012

Adults Meeting Cardiovascular Health Metrics NHANES 1988-1994, 1999-2004, and 2005-2010.

Yang, Q. et al. JAMA 2012;307:1273-1283 .

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%

Leading Causes of Death: Chronic Diseases (US, 2010 Preliminary)

# %

Heartdisease 595,44424.15%

Cancer 573,85523.27%

Stroke 129,1805.24%

COPH 137,7895.59%

Accidents 118,0434.79%

Alzheimer’s 83,3083.38%

Diabetes 68,9052.79%

Flu&pneumonia 50,0032.03%

Nephri\sandrelated 50,4722.05%

Suicide 37,7931.53%

Na\onalVitalSta\s\csReports,Vol.60,No.4,January,2012

Most Medical Spending is Tied to Chronic Diseases

21

Allspending… Medicare

Source:PartnershipforSolu\ons.ChronicCondi\ons:MakingtheCaseforOngoingCare.September2004Update.Availableat:hap://www.rwjf.org/files/research/Chronic%20Condi\ons%20Chartbook%209‐2004.ppt.AccessedonApril17,2007.

Sharespentonpa?entswithchronicdiseases

83%

Medicaid

96%

23

The Population Age 65 or Older as a Percentage of the Population Ages 20 to 64

Percent

Source:CongressionalBudgetOffice,2012

Can We Reduce Our Federal Deficit and Create Jobs by Making

the Healthy Choice the Easiest Choice?

ROI Workplace Health Promotion Programs

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 2.73

Source:BaickerK,CutlerD,SongZ,HealthAffairs,Feb2010

Meta-analysis

2012 Meta-Evaluation Findings: Overview

Study Parameter Averages & Totals (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‐Evalua\onofEconomicReturnStudiesforWorksiteHealthPromo\on:2012UpdateAmJHealthPromot26,4

Progression of Disability by Age�University of Pennsylvania Study 1986-2005

FriesJF,etal.JAgingRes2011,Ar/cleID261702.

w/60%ofcohortdead‐delaydisability10years‐delaydeath3.5years‐compressdisability6.5years

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 Calculations

If 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 improving health provides the best strategy to preserve the fiscal solvency of

our nation how do we improve health?

Make the healthy choice the easiest

choice!

Priorities

1.  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 inequality

2.  Focus mission of federal departments

3.  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:FairSocietyHealthyLives,Ins\tuteforHealthEquity,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 times

each day with the most effective strategies where they work,

shop, study, worship and relax.

FundingfromOrganiza\onsthatBenefittoOrganiza\onsthatCanEngagePeopleinEffec\vePrograms

Workplaces

ParksFaithGroups

Employers

Clubs ChildcareK‐12

SchoolsColleges

Hospitals&Clinics

USTreasury CMSInsurers

PeopleHealth

promo\onproviders

Restaurants&grocers

?

Source:O’Donnell,AJHP,July,2012

StateMedicaid

FitnessCenters

Definition of Health Promotion

Health 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. O'Donnell (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 Awareness Enhance 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

FundingfromOrganiza\onsthatBenefittoOrganiza\onsthatCanEngagePeopleinEffec\vePrograms

Workplaces

ParksFaithGroups

Employers

Clubs ChildcareK‐12

SchoolsColleges

Hospitals&Clinics

USTreasury CMSInsurers

Healthpromo\onproviders

Restaurants&grocers

?

MichaelP.O'Donnell,PhD,MBA,MPH,2012

$34.4 billion

$10.8 billion

$3.95 billion

$24.1 billion

$4.9 billion

$2.36 billion

StateMedicaid

$4.5 billion $16.1 billion

$20.7 billion

$4.3 billion

FitnessCenters

People

Comprehensive health promotion programs for 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 Colleges

K-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 people

1-99 w/insurance: 28,659,568 20,781,173 49,440,741

1-99 w/o insurance: 13,486,856 9,779,376 23,266,232

100 + self insured: 78,757,127 57,107,123 135,864,250

sub total 120,903,551 87,667,671 208,571,222

CHIP 5,085,107

Medicaid 58,106,000

Medicare 40,211,000

sub total 103,402,107

total 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

$4,540,118,975innewstateincometaxrevenues

$22,530,806,666innewfederalincometaxrevenues

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

Employers Employers Insurance State governement

Federal government

Federal government total

Employers: 1-99 w/insurance: $4,944,074,084 $4,944,074,084 $9,888,148,168

1-99 w/o insurance: $2,326,623,180 $2,326,623,180 $4,653,246,359

100 + self insured: $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 $41,714,244,483

CHIP $1,017,021,400 $1,017,021,400 Medicaid (Federal share: 61%) $4,532,268,000 $7,088,932,000 $11,621,200,000

Medicare $8,042,200,000 $8,042,200,000

sub total $0 $0 $0 $4,532,268,000 $0 $16,148,153,400 $20,680,421,400

total $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

Employers Employers Insurance State governement

Federal government

Federal government total

Employers: # of employees

# of dependents total people $200/per $100/per $100/per $200/per $100/per $200/per

1-99 w/insurance: 28,659,568 20,781,173 49,440,741 $4,944,074 $4,944,074 $9,888,148

1-99 w/o insurance: 13,486,856 9,779,376 23,266,232 $2,326,623 $2,326,623 $4,653,246

100 + self insured: 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

41,714,244,483

CHIP 5,085,107 $1,017,021 $1,017,021

Medicaid (Federal share: 61%) 58,106,000 $4,532,268 $7,088,932 $11,621,200

Medicare 40,211,000 $8,042,200 $8,042,200

sub total 103,402,107 $0 $0 $0 $4,532,268 $0 $16,148,153 $20,680,421

total 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 Profits

Corporate Income tax

Social Security tax Medicare tax

individual Income tax Total

Taxable revenue Rates: 10% 35% 27.7% 12.40% 2.90% 20.00% Employer medical cost savings $48.36 $13.40 New health promotion vender revenue $60.39 $6.0, $21.14 $1.67 $2.62 $.61 $4.22

New federal income tax receipts $15.07 $2.62 $.61 $4.22 $22.53

New federal spending on health promotion

$16.15

Net federal surplus

$6.38

State Corporate

Income tax

State individual

Income tax Total

New taxable revenues Rates: 10% 35% 6.5% 4.75% Employer medical cost savings $48.36 $48.36 $3.14 New health promotion vender revenue* $60.39 $6.04 $21.14 $.398 $1.00

New state income tax receipts $3.53 $1.00 $4.54 Total State spending on health promotion $4.53 Net State surplus

$.00785

New State Tax Revenues (billions)

*Assumesexis\ngrevenuesof$2billion

Additional Savings to Governments Through Reduced Medical Costs from Employee Wellness Programs

Government Civilian Employees Employees Dependents Total Lives Savings

Federal 2,823,777 2,047,533 4,871,310 $1,948,523,814

State 4,399,190 3,189,871 7,589,061 $3,035,624,441

Local 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%

receipts 5% 10% 15% 20% 25% 0.3

othertaxes 31 31 31 31 31 31 31

corporatetaxes 29 29 29 29 29 29 29

SStaxes 132 139 145 152 158 165 172 Personalincometax 137 144 158 182 218 273 355

total 329 342 363 394 437 498 586

change 13 34 65 108 169 257

16.32%

spending

other 139 139 139 139 139 139 139

social security 110 105 99 94 88 83 77

Medicare, etc 280 266 252 238 224 210 196

current 11

540 510 490 471 451 432 412

change 20 39 59 78 98 117

deficit 211 167 127 77 14 -66

Social Security Savings

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 to do to engage YOU?

How do we rally support without

creating 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 ideas

volunteers@healthpromotionadvocates.org

Can We Reduce Our Federal Deficit and Create Jobs by Making

the Healthy Choice the Easiest Choice?

66