Rising Rates of Chronic Health Conditions: What Can Be Done?

Conference Transcript
July 31, 2008

P R O C E E D I N G S

Paul Ginsburg: Good morning. I'm Paul Ginsburg, President of the Center for Studying for Health System Change, an independent, nonpartisan policy research organization funded, in part, by the Robert Wood Johnson Foundation. And I want to thank all you for joining us today, for the first of four HSC conferences on significant health policy topics sponsored by the Pharmaceutical Research and Manufacturers of America, the DMAA, the Care Continuum Alliance, and the American College of Preventative Medicine. Under the sponsorship agreement, HSC and the three groups jointly chose the conference topic, while HSC is solely responsible for organizing and conducting the conference. We will be writing up an issue brief to put out broadly with the highlights of this conference. And in coming months, we're planning to hold additional conferences to examine innovative approaches to preventing and managing chronic health conditions and value-based health benefit structures.

The growing prevalence of chronic conditions has added cost to the United States health care system. Prevention and better management of chronic conditions are often cited as ways to improve health outcomes and slow U.S. health care spending growth, or at least generate better value for the $2.1 trillion that we spend annually on health care in the United States. Today, we hope to provide you with an overview of the causes, costs, and consequences of rising rates of chronic conditions, and some possible policy approaches to address what is clearly a significant public health problem. In some respects, America's rising rates of chronic conditions reflect the huge advances in public health, industrial safety, and medical care over the last century. A hundred years ago, most people didn't live long enough to develop a chronic condition. In 1900, an average American's life expectancy was 47 years; today it's 78 years. A hundred years ago, the top causes of death were infections, such as pneumonia, influenza, tuberculosis, accidents, and child birth.

Today, the leading causes of death are heart disease, cancer, and stroke. While advances in public health and medical care have been spectacular, our health care system is behind the times when it comes to providing early intervention and high-quality care for people with chronic conditions. We have a system that remains focused on providing acute episodes of care. We're pretty good at treating a heart attack, but not so good at preventing and managing the underlying heart disease that leads to that heart attack. Our first panel, Dr. Carolyn Clancy, Director of the Agency for Health Care Research and Quality, and Dr. Eric Finkelstein, Health Economist and Director of Public Health Economics Program at RTI International, are going to give us an overview of chronic conditions and some insights into how we got where we are and what the consequences of rising rates of chronic conditions mean for patients in the health care system.

And Dr. Finkelstein is going to help us understand how rising rates of obesity are related to our economic prosperity. Dr. Clancy.

Carolyn Clancy: Good morning, everyone, and thank you, Paul, that was a lovely backdrop for a very huge, huge set of issues. And if there's one point that Paul just made that I would underscore, it is that this is a consequence of success in treating acute conditions. So on some level we might say, well, this is a good problem to have. That would be the good news. The slightly less good news is, our health care system is not really set up for that, and on some days it feels like for every two steps forward we make, we take one and a half backward, because our mindset is so dominated by acute conditions, or what my residents used to call stamping out disease, they weren't always joking.

So it's really a privilege to be here and also a privilege to be here with Dr. Finkelstein. So I'm just going to paint a very broad brush in order to set the stage for subsequent discussions about what do we do next.

If you think about t.v. shows, right, it is never about chronic conditions, you know. It would not be, how would I say, a story line for House or ER or anything else, even though, you know, that someone actually now is managing their diabetes effectively.

I think this is a spectacular lack of imagination on the part of screenwriters myself, but the bottom line is, what captivates our imagination and so forth is all of this drama, and in a very funny way, that frames how we think about health care in many different ways. And yet more people die every year from heart disease than AIDS, tuberculosis, and malaria combined. That's not to say those problems aren't important, of course, but there are big, big issues. And as Paul also noted, as we get better and better at acute intervention, to the point where it's actually hard to measure mortality rates in many institutions and the complication rates keep going down. However, our luck in collaborating with patients to get them to adhere to recommended medications after they're discharged for these procedures, as far as I can tell hasn't budged at all, and it's pretty dismal.

So chronic diseases now account for 60 percent of global deaths and will account for about 75 percent of all deaths by 2020. And developing and transitional countries are catching right up to developed nations in this regard.

So from the statistical brief, which is in your folder, from the Medical Expenditure Panel survey, my colleagues were able to demonstrate that in 2005, about 60 percent of the U.S. population over 18 had at least one chronic condition, and $3 of every $4 spent on prescriptions was for treatment of chronic conditions. And I'm sure a lot of you were quite struck by the story in the New York Times the other day about how we're now adding children to those ranks; the statistical brief does not address that issue specifically. Nearly four in ten Americans between 18 and 34 had one chronic condition, as did nine out of every ten aged 65 and older. And for those in the Medicare program, chronic conditions is where we spend the most money and provide the worst care.

A relatively small proportion of folks, and I would never use an exact cite in front of Paul, who could be much more precise about it than I could, but the small proportion of folks who account for a very, very large proportion of our expenditures are people with multiple chronic illnesses.

Now, interestingly, as this population becomes more diverse, we end up with a sort of two-fold challenge; number one, many of these chronic conditions, the leading chronic conditions, are more common in people of either lower socioeconomic status and/or people who are members of racial and ethnic minorities, a phrase I have to use with some care because a number of communities will soon be majority minority.

But the conditions are not only more prevalent there, but we also do a worse job for those patients in terms of quality of care. So what I'm showing you here is a picture of an article in JAMA published about a year and a half ago by Johnny Ayanian and his colleagues at Harvard, and what they did was to actually look at black/white differences for patients enrolled in Medicare Advantage plans. And they had found two things as a result of this in a previously published study; number one, public reporting and transparency on quality has actually really focused attention, so the disparities are minimal and not significant between blacks and whites for those items that are completely under the control of providers in the exam room, ordering the right tests and so forth. For those of you who are thinking this sounds pretty basic, you'd be right, but nonetheless, we weren't doing so well before, so things are moving along.

When you start looking, as this paper did, at actual control of hypertension, control of LDL cholesterol, the proportion of folks who are - whose diabetes is not under good control, we're not seeing any narrowing and disparities at all.

Very, very slow improvements, but yet the overall rates across all people are still not that great, somewhere in the ballpark of 60 percent for optimal control of diabetes, hard to believe that's the Everest of our ambitions. But if you think about it, this is where the patient's role in self-management comes in, and I think a real opportunity for clinical care delivery to link in some new kind of imaginative way with community resources, public health and so forth.

So this slide just shows that in 2004, 26 percent of all Americans had two or more chronic conditions, and clearly these numbers keep increasing. Nine of the top ten highest cost conditions are chronic in nature. The only one that is not a chronic condition, at least not by our current definitions, would be trauma.

The rest you can see here, and I know that you'll be hearing more about how some of these conditions cluster in individuals, because the individuals who've got multiple chronic conditions are the people where we have a really unique challenge, and the opposite side of that would be to say we have an opportunity to improve care.

If you look at overall spending, 85 percent of health care spending is for people with chronic conditions. And we also know from the Milken Institute, and I notice the brief is also in your folders today, that 40.2 million cases of chronic conditions can be avoided, and $1.1 trillion, wow, can be saved by 2023 by making reasonable improvements in preventing and managing chronic diseases. And you can see for each of the conditions listed here the number of cases that we'd expect in 2023 and the potential number that are averted. So this begins to put boundaries on the scale of the opportunity before us.

Now, I've made it sound like, well, we've got a bunch of straight forward things to do and we just need to pull up our socks and figure out how to do them. The reality is, most of our scientific evidence base actually derives from one condition at a time. So we've got enormous depth in what to do and the effectiveness of different treatments and diagnostic strategies for cardiovascular disease.

For example, we've got probably not quite that deep, but a lot of information on how to manage diabetes or how to manage some mental health conditions and so forth. Where our evidence base is pretty thin is how to manage effectively people who've got several of these chronic illnesses, particularly people for whom one of the chronic illnesses is a mental health disorder.

We've been describing with great detail, as have many others for a number of years, that all things being equal, if you have a heart attack and you're depressed, you do worse, controlling for everything else then if you simply have a heart attack, and the list goes on and on for studies like that. The next frontier is clearly going to be to figure out how do we treat that combination effectively and how do we help patients deal with that.

When you're looking at people with multiple conditions, you've not only got interactions between illnesses and between treatments, you've got people on multiple medications, multiple providers -- the Center for Studying Health System Change I think has shown this in a very compelling, if scary way, just how many providers some patients are seeing, so many that it's really hard to imagine that there's a common script across this array of clinicians.

And sometimes it's even attention between therapeutic goals. If you are dying of cancer, maybe we don't want you to have a hemoglobin A1C of seven would be an extreme example. But when you, you know, struggle with which diabetes medication is right for someone who also has cardiovascular risk factors, you know, these issues become very, very real for clinicians. Just a couple of words on some things that AHRQ is doing in this area right now. This has been a big focus for us and will continue to be so, both in the work we do evaluating applications of health IT, to improve safety and quality, as well as in the safety arena itself. Every year we report to the Congress on quality and disparities in health care, and what we've been finding for the past several years is a pretty profound set of disparities for older Hispanics.

So for the past year we've been working very closely with the area agencies on aging, through the Administration on Aging, as a way to actually get into communities with a high penetration of Hispanic elders, to try to provide evidence- based tools and peer-to-peer learning, to keep those folks as healthy as possible.

There are eight communities shown here. I don't think the list here would surprise anyone. And the team has developed community partnerships to target health disparities among Hispanic elders. What this has involved for us is taking data from the disparities report and bringing it down to the local level so they actually know and can literally map what are the neighborhoods that need the most attention. And I think it's going to be that kind of series of partners, and frankly, incentives for those partnerships, which is going to help us get to a better place managing chronic illness. We have funded some work this past year, I mentioned, in the use of health IT. This is just one example here shown for shared medication management and decision support for clinicians working in rural areas.

Medication management pops up on almost everyone's list of priorities to improve in health care, because again, if you're a patient seeing six doctors, the likelihood, in my clinical experience, that not everyone knows all the medications you're on is close to 100 percent. That is not a scientific observation, by the way.

Ultimately, we've got to build a health care system that is information rich and patient-centered, and notice how that rolled right off my tongue. That is really where health IT is going to make a huge difference.

One other resource in terms of patient centered that I just wanted to mention to you, and we didn't have a chance to share it today, we very recently put up on our Web site an evaluation done by a team at RAND of patient self-management programs. This was work originally developed by Kate Lorig and folks at Stanford, and since then has led to many other modifications and so forth, very much a work in progress. But if there's one thing we've learned from these programs is, this is not all about clinicians, this is very much about how patients live with a disease and manage it. And it's probably not so much about knowledge as it is about motivation. So I'm just finishing up here with an article or a commentary that was recently in the Archives of Internal Medicine, and this is more, again, just to give you a sense of the challenge before us.

I had the privilege of offering a commentary on a paper that came from Harvard Vanguard. Now, Harvard Vanguard is the medical group that's left from the Harvard Community Health Plan, and on paper they got it all right, right. They work in teams, they've got incentives to do better, they've got electronic medical records, they've had them for a really long time, they have clinical decision support and so forth, and yet what this article showed was that not only did they have disparities in management of diabetes and associated cardiac risk factors, but that those disparities were very clear and significant at the level of individual docs.

Now, the good news is, they're taking these findings and now trying to give docs feedback and figure out what do we do next. But what else has struck me was, notwithstanding all those structural resources that we think of as so critical, their results actually aren't very much different than the mean for plans reporting through HEDIS. And again, this brings up the, how do we do much, much better than having roughly 60 percent of people with diabetes effectively managed. Yes, there are some that we don't want to actually be that aggressive with, but it's not 40 percent. And to do that, I think we're going to have to stretch our brains much more about what are the boundaries of clinical care, how do we provide incentives to clinicians, to systems, and ultimately even to patients to do a much, much better job, because, clearly, their health and the future of our health care system depends on it.

So I will simply end with a brief public service announcement. If you're interested in this stuff, our annual meeting is in September and it's free. Thank you for your attention.

Paul Ginsburg: Thank you; Eric.

Eric Finkelstein: I do want to make one comment somewhat related to Dr. Clancy's comments. We actually have a paper coming out based on data from CDC's program, where they bring women in and they screen them for heart disease risk factors, cholesterol, diabetes, high blood pressure, and, in fact, what this paper shows is that half the women who come in and are identified with diabetes or high blood pressure or high cholesterol, when they come in a year later, they will - half the women will say they've never been told that they' had these conditions, yet we know from our base line data that they've come in, that they've been screened, they've been diagnosed, and that they've been presented with information about these conditions and treatment options. Twelve months later they claim they've never been made aware of it.

And I think that's critically important in trying to understand why there's a disparity between what the physicians are saying and what the patients are saying.

So let me move on to my topic. I just want to talk fairly briefly about obesity, clearly a risk factor for nearly all of the chronic diseases that Dr. Clancy mentioned, and, in fact, as you all are well aware, a growing epidemic in this population for both youth and adults. And what I want to do essentially is talk about obesity as an economic issue and set the stage for how economic factors are not only responsible for rising rates of obesity, but that these rising rates of obesity have significant economic costs on businesses and on government, and then ultimately tell the story of how it's going to be economics or a changing economy that's going to stem the tide in rising rates of obesity.

I'm going to move relatively quickly because I know we don't have a lot of time and I know that we want to have an opportunity for some questions. So let me just present this slide here, which basically shows rising rates of obesity over the last couple of decades from the NHANES [National Health and Nutrition Examination Survey] data.

Now, one thing you can't see from the slide, but I do want to make it clear, is that rising rates of obesity have increased among all subsets of the population. But, in fact, I think people might be surprised to know that it's actually been Higher-income groups, not lower-income groups, who have seen rates of obesity rise fastest, and I think that's an important point because I think there's a general misconception that obesity is more of a problem among lower-income groups, and my point is, it certainly is a problem among lower-income groups, but, in fact, it's a problem among all income groups. And, in fact, once you separate out race and gender, at least for men, for example, there's almost no SES grading to obesity. Rich, African American men have about the same obesity rates as low-income African American men, same with Hispanics, same with Whites.

With women, there is an SES trend, but it's actually very small compared to the huge racial gaps in obesity rates, and so I wanted to just make that point clear, and we can talk about some of the implications of that hopefully when we move forward.

Just a quick story that I think really sets the stage for what I'm trying to sell when I talk about the economics of obesity. Mauritania, as you may know, is an African country, and in fact, the history of Mauritania is that, well, part of it at least, is that if a young girl wanted to get a great husband in Mauritania, basically what she had to do was get fat, super fat, the more fat she had, the better the husband.

And so for generations, moms and grandmothers would force feed their daughters and fatten them up in efforts to get them a good husband. It went on for generations, but, in fact, about 15 years or so, this actually stopped, or at least has gone down considerably. And the reason was not any public health campaigns aimed at changing behavior, although those were going on; what happened was, there was a famine in Mauritania and the price of food sky rocketed, and mothers and grandmothers just couldn't afford to feed themselves, let alone over feed their daughters, and so this practice really died away.

And so the moral of the story is basically that in the U.S., here where cultural norms are for thinness, certainly at least for Caucasian or Caucasian women more so, we're seeing exactly the opposite phenomena taking place. Cultural norms are for thinness, yet we see rising rates of obesity.

And the argument that I'll make here is, it's exactly the opposite of what's happened in Mauritania; food prices, as well as prices for other sorts of labor- saving technologies and other things have gone down, so we're seeing more food consumption and less physical activity, economic argument.

And let me formalize that argument by talking about some of the data associated with food consumption and caloric expenditure. If you look at the NHANES data, what you find is that food consumption or caloric consumption has certainly increased dramatically over the past few decades. So consistent with the story of, you know, more food consumption, rising rates of obesity. And the argument that I'm selling is, the increase in food consumption is a direct result of a decrease in food prices, both the monetary price of food, as well as the opportunity or acquisition cost of getting that food into your mouths.

And, in fact, there's some data that I presented on this slide that's probably easier to see here which looks at the trends in food prices, up until, of course, the last two years, where we've seen a big change in food prices, but I'll return to that point in a second.

If you look at the slide here, basically this line here is the general CPI of food. Things below the line have gotten relatively less expensive; things above the line have gotten relatively more expensive. And if you look at the things above the line, what you see, it's fresh fruits and vegetables, fish and seafood, fruits and vegetables, those things have been getting relatively more expensive relative to things that have lots of added sugars and added fats, and so it's not surprising that we're consuming those things in greater quantities. And, in fact, right here you can see the relative price of food, at least until about 2005, actually had dropped fairly rapidly compared to non-food items. So again, it's an economic argument that suggests as food prices go down, food consumption goes up.

And I can tell a similar story about opportunity or acquisition cost. Certainly fast food prevalence has increased dramatically, restaurant food has increased, there's been great technology in freeze drying and prepared and pre-packaging.

But I think a great example of all of this is the microwave oven, which clearly makes it very easy to consume lots of tasty and affordable food very easily. And, in fact, if you look at the microwave oven, only about 8 percent of homes had them in 1978, and, in fact, today, almost every home in the country has one, and that's just one example, but it certainly points to the idea that it's just cheaper and easier to consume food today, so not surprisingly, we consume more food.

Let me just flip to the caloric expenditure side of things. And I'll talk first about the leisure side of things, and I'll make the argument that basically we would expect to see less leisure-time physical activity because it's now competing against better technologies that are essentially crowding it out. And I point to examples like the Internet, computer games, DVDs. These things just weren't available, and so we have more to compete against, and so we're seeing leisure-time physical activity getting squeezed out.

And again, I just point to cable TVs as I think a pretty good example. Seven percent of homes had them, you know, a few decades back, and today about three- quarters of homes have them. Internet access is another one; actually, that number needs to be updated, it's much higher now.

But the point is, in our leisure time, where we used to engage in physical activity, it's now essentially being competed against by technology that just wasn't available, and so we're seeing it crowded out.

In fact, those of you like myself who have kids at home certainly know what I'm talking about when you're trying to push these kids off the technologies and get them to go outside and engage in physical activity. But the same story goes for the non-leisure time, what I call accidental exercise, the exercise that people used to get throughout the work day. Today, we've mechanized just about every occupation where you'd have to think pretty hard to find an occupation that hasn't been mechanized to the extent that you get almost no physical activity at all. And so I make the point that accidental exercise is almost non-existent.

And again, another economic argument, we certainly could reengineer physical activity back into our work day, but the reality is, we'd probably get lower wages as a result because we'd be less productive, we'd produce less, and so goods might be more expensive, and really, I'm not convinced we would want that, and I'll return to that point in a couple slides.

There is a great paper by Lakdawalla and Phillipson that shows that if you work in a sedentary occupation your whole life, you're going to weigh about 25 pounds more than if you worked in an occupation that had a lot of fitness demands. And so, clearly, the changing economy, the workplace economy, has also played a role in helping us gain some weight.

And I do want to point out, I actually tell the story, I ran a marathon a couple years ago, and I tracked my steps on a pedometer for the four months until I got the 53,000 on the day of the marathon, and, in fact, over that four month period, I averaged only about 10,700 steps for day, which isn't much more than some of the recommendations out there for physical activity. And the reality is, if I wasn't out doing my three or four mile jogs, I was sitting on the computer doing pretty much nothing.

And so I make that point only to say that essentially if you want to get your five miles per day or get the 10,000 steps recommendation, you pretty much need to go out and train for a marathon, and the reality is, that's a pretty tall task.

One other cause of rising rates of obesity that I think is overlooked, but also critically important, and this is what I call moral hazard. In economics, moral hazard is the idea that once you're insured against some type of bad outcome, say if you have car insurance, you may be less likely to lock your doors or less likely to drive carefully, and so the reason is because you know that you have some third party who's going to cover the cost of a poor event or a bad outcome. And so with respect to obesity, I try to make the argument in the book that essentially the health costs of obesity, not that obesity isn't bad for your health, but that it's not as bad for your health as it used to be, and so if the health consequences of obesity have gone down, then a rational agent or some individual might say, well, I don't need to worry about being obese as much as I might have in years past, and that might partly explain, as well, why we see rising rates of obesity.

And I point to statin's and all sorts of new products and services that are just readily available today that can help the obese individual better manage the adverse health effects, and so they may be less worried about their excess weight.

And, in fact, there's a great article by colleagues at CDC who actually show that today's obese population has a better cardiovascular disease profile than normal weight individuals did, not the obese individuals, but the normal weight individuals did several decades back. And, of course, that's partly due to the statins and all these new technologies that just weren't available. And I'm not talking about technologies to treat obesity, I'm talking about technologies to help manage all these conditions that obesity promotes. And so really, I'm just trying to point out that it's an economic environment or the changing economy that's lowered the cost of food consumption, price and non-price, raised the cost of physical activity in terms of the opportunity cost, as well as being physically active on the job, and that's essentially lowered the health cost of being obese, and so these three factors have really combined to create an environment where we would expect to see rising rates of obesity, which is exactly what we've seen.

But I do want to make the argument that these changes in the economy are not on accident, right. Consumers are certainly demanding lower cost products and services, we like technology, we like health care that can cure us when we get sick, and so these changes, in effect, reflect consumer preferences, and so while obesity in and of itself is bad, we have to ask ourselves, although we may be fatter, are we actually worse off, right.

And I think we need to ask that question, because when we start thinking about solutions, these solutions aren't going to be done in a vacuum, they're going to impact all of these factors, and we need to understand what individuals are actually willingly going to do to change their behavior, okay, and I'll return to that point in one second. And so the point of the argument here is that, you know, with the changing environment, it's not that obesity is not bad for your health, but that the behaviors required to get people to weigh less are just becoming increasingly costly, and so what economists call a utility maximizing individual or somebody who's making good choices may actually make good choices that lead to excess weight.

And, in fact, in the book I talk a lot about my obese Uncle Al, who happens to be a very smart, very successful, very wealthy attorney who's obese because he spent his adult life working in the law firm and wining and dining clients, whereas other individuals have spent their time dining and exercising, and the reality is, for my Uncle Al, it's hard for me to argue that his choices were not rational or not well informed, they're just different choices than he might have made a few decades back, and perhaps different choices than the public health community would like, but it's very difficult for me to see what we could do or say to get Uncle Al to change his behavior. And, in fact, even more importantly, I think we need to ask ourselves why we even want to do that. And I'm not saying we don't, but I'm saying that we need to ask these questions before we start trying to get him to change his behavior.

So just to make one point as I conclude, essentially, if you're going to try to get people to change behavior, I would make the argument that you need to change the environment and make it cheaper and easier to engage in those behaviors that are health promoting and more expensive to engage in those behaviors that are obesity promoting.

And so I talk about interventions that change cost and benefits are those most likely to be successful. I don't think information campaigns are likely to have much of an impact, because I think people either do know or could know that these things are bad for them and that information is maybe part of the story, but in and of itself is not going to be enough to significantly change behavior in an environment that's pushing us in the wrong direction.

I talk about incentives; we actually have a paper that we published that showed for $7 a pound, at least for a little while, you can get people to lose some weight. And I'm not saying that's a cure all to obesity, but it certainly suggests that even small incentives matter and can be potentially effective, certainly more effective potentially if combined with some environmental and other changed factors that make it easier to engage in healthy behaviors.

So just to wrap up, in my opinion, obesity is really a side effect of our own success, and that given this changing environment, we would expect to see people increase their weight because of the fact that it's just more expensive on many levels to be thin.

When it comes to government, I want to make two points, one is, and it's not really on the slide, but many in government have used the high cost of obesity to justify government interventions.

Obesity is clearly costly on many levels. But if you're going to use the high cost of obesity to justify public money on government interventions, then by definition, those interventions must be cost saving, otherwise you're going to increase the tax burden even more, right. So if you want to use that argument, then you can only justify cost saving interventions, and the reality is, publicly funded cost saving interventions just don't exist. In fact, I don't think any cost saving interventions for obesity that I've seen, maybe bariatric surgery, but I think that's pretty debatable, as well. And so I think that we need to be careful when we talk about the high cost of obesity as a rationale for public obesity intervention efforts.

One other point, I think the government's role in obesity should be not really to be in the obesity prevention business, per se, but really to look at some past policies that probably helped promote obesity rates, and I'll point to some of our agricultural subsidy policies, for example, even zoning policies that essentially encourage people to use automobile transportation as opposed to other forms of transportation. Even some of the ways we subsidize health insurance I think promote treatment over prevention.

And so the government can really look at these policies and say, these may have made a lot of sense at the time, but in a world where two of three individuals are overweight and obese, do these policies still make sense? And I think that would be very helpful for the government to engage in that kind of thinking process. And then again, I think that incentives on many levels are going to be part of the solution, but, in fact, I think only part of the solution. I also think that although technology is certainly part of what got us into this current epidemic of obesity rates, technology is also going to be part of the solution.

And I think, you know, we can talk obesity drugs, for example, and you know, the reality is, public health folks may not like that as an obesity solution, but my Uncle Al probably would and I suspect would pay lots of money for it.

But I don't just mean obesity drugs or procedures, I'm talking about technologies that may reengineer physical activity into our work and entertainment like, like the Wii video game system, for example, or lots of new technologies that we might not even have thought about yet that certainly are, I suspect, going to come around the corner, because although, you know, obesity rates are high, there's a huge demand for products and services to help people lead thinner and healthier lives, and I think the private sector will respond. I'll stop there. Thank you very much.

Paul Ginsburg: I'd like to thank you both for some terrific presentations. I have a couple of questions; each of you may have some questions or thoughts. And then I'd like the audience to get ready for their questions. We're going to have a mix of question cards and people coming up to the microphones.

So let me begin with a question for Carolyn Clancy. You know, if you think of the pretty striking data you presented on proportions of people with chronic diseases and the portion of health care costs they account for, figuring that the initial audience at least for data like this are opinion leaders, every once in a while I get into a conversation with an opinion leader that says, well, you know, look at me, I have two chronic conditions, my blood pressure is too high and my cholesterol is too high, I control them both. How many people like me are in those statistics or are we a minority of it? And I don't know if your staff has done any digging into that.

Carolyn Clancy: We have done some examination of that. And I mean the other way to go about this is to actually look at the concentration of expenditures, which is where I didn't want to get too precise because I know this is an area where you've done a lot of work, as well.

Paul Ginsburg: I'm sure you'll be right.

Carolyn Clancy: So I will clarify using my medical training. You know, in medical school you learn that 20 percent of people get 80 percent of conditions, and it turns out that the concentration of expenditures kind of looks a little bit like that, as well, so I want to say five or six years ago it was 20 percent of people incurred about 72 percent of our health care expenditures.

What that means, that has huge implications for many cost-containment strategies. But the vast majority of those folks have multiple chronic illnesses. So, yes, there are healthy people, and yes, for those of you who are JAMA readers, you may have seen a little sardonic column a few weeks ago that talked about how to make P for P work for you.

This is from disgruntled doctors who think the whole thing needs rethinking, which basically said, you know, you can basically over read and over diagnose and pump up the denominator and then your panel will look better. But I don't - I mean I think Eric has got a terrific point, and it would be great to dissect that, how many people are very well maintained now and the medications that we have. But by and large, when you look at how we got to pretty substantial reductions in mortality from heart disease, clearly hypertension was a huge, huge part of that, and the rest has been sort of secondary prevention, you know, making sure people get beta blockers and so forth. But I think there's a lot of opportunity to do more of that kind of modeling, as well.

Paul Ginsburg: In fact, maybe something that would be useful for future surveys is questions that would help you distinguish - well, actually this would be hard-- I guess you'd need physical examination between people who have controlled hypertension and people who have uncontrolled hypertension.

And a question for Eric Finkelstein; you know, a lot of the things you said is how, you know, broad economic forces are important determinants of obesity, you know, particularly the price of food. But then you mentioned that socio-economically, that within say an ethnic group, very little variation, and how do you reconcile the two?

Eric Finkelstein: Well, I think the reality is, we've all - all consumers have seen the same price drop, and so it's not that prices of food have gone down for poor people so poor people are gaining weight, we've all seen price decreases, and so what I'm trying to say is that broad changes in the economy have impacted all of us, and so we've all equally seen this rising rate of obesity.

Now, I think for wealthier populations, they may have actually seen a rates rise a little bit faster, because there was a disparity three or four decades back, but that may be because they have more resources that they can spend on, you know, tasty food and sedentary entertainment.

Paul Ginsburg: Yes; because I would have thought that if the food prices are falling for everyone, that you'd have a larger response if you're low income to that.

Eric Finkelstein: That's actually a good question. I mean one of the questions that I've sort of been curious about is, people tend to assume that low-income consumers eat more fast food, for example, or drink more Coke, I'm not sure that's true, and in fact, that's an empirical question.

We actually just got a grant to take a look at this question. I mean I suspect low-income consumers probably drink more, you know, lower-priced Coke, and rich people maybe drink more Coke and Pepsi, but who consumes more calories from carbonated beverages, I'm not sure. I mean rich people have more money to spend on liter goods, and they like Coke, maybe they drink more Coke. And I'm not trying to say Coke is what's causing obesity, but you know, you can extend that argument to lots of products.

Paul Ginsburg: Sure, thanks. And you also made a point, which I think is very wise, that there probably are few opportunities for public policy addressing obesity to actually save money for government, and is there much discussion among people you work with about this issue that if, in fact, government succeeded in reducing obesity, that since most public spending for health care is focused on elderly people, that actually that might - that success might increase spending because there would be more people enrolled in Medicare more years to collect those benefits?

Eric Finkelstein: Well, you know, this is a funny argument, but, in fact, this was the argument made for smoking. And, in fact, people have said, well, if you really want to reduce the burden of smoking, you should subsidize cigarettes, because you get all these people to smoke up, they pay a lot of taxes, then they die before they collect on their social security argument. And, in fact, people have tried to make similar arguments for obesity, but the reality is, for obesity it doesn't hold because people get these chronic conditions at fairly young ages, and really, the mortality impact for obesity is pretty small.

And, in fact, Kathryn Feegle at CDC has published a paper that shows that it may be non-existent until you hit BMI's in the mid 30s or higher. And, in fact, we have a paper that came out a couple months ago in Obesity that shows the life-time costs of obesity is actually greater. So that sort of cost saving argument doesn't hold.

But I think the broader question is, is the extent to which it's appropriate to use cost of obesity as a justification for these public sector interventions, and I think we really need to be careful how we frame that argument.

Paul Ginsburg: Good; now it's time for you, and do you want to start, sir? And actually, if you people could just line up at the microphones, because I'd like to get a recording. And please pass your cards into the aisles of those that prefer the question cards. Yes, why don't you go ahead first.

SPEAKER: Hi, I'm wondering, what should employers be doing in their disease management programs and wellness programs to address the chronic - the co-morbid conditions, you know, the person with two or three? The sense that I get right now is that, you know, they have cost saving measures, but they're, you know, you might get put into the program for cholesterol, and you might get put into the program for hypertension, but maybe they're not integrated.

Paul Ginsburg: Yeah; actually, one thing I was going to say is that a speaker on our next panel is the ideal one for that, but if either speakers on this panel want to respond, go ahead.

Carolyn Clancy: So let me just say that disease management programs I think still represent a fertile area for more research, because it gets very hard for us to identify who are the people most likely to benefit, how to address the challenges of people with multiple conditions when we've got programs that address one at a time and so forth.

I will say I've had the opportunity recently to hear about some employers who are doing some pretty innovative work for some of their sicker employees with several chronic illnesses, which is pretty exciting; Boeing is among them and so forth. And having had a discussion with employers about this last week at our Advisory Council meeting, what came out of the discussion was a number of employers saying, you know, I'm realizing now that we get the fact that if we make people pay out of pocket, for example, for medications to manage chronic illness or for preventive care, they may not do it, so we're actually providing some support for that, but we don't actually know how to do that, what the right amount is and so on and so forth.

And I was thrilled to hear about that because it seemed to me an opportunity for empirical information to literally shape that kind of policy.

Paul Ginsburg: Yes.

Stephen Forstenzer: I have a comment and/or question, depends on the way you look at it. My name is Steve Forstenzer, I'm with the Maryland Health Care Commission. The issue that we're talking about on the economic impact of chronic conditions ain't new. I was doing a research project in the '60's, when a lot of people in here weren't born yet, and discovered that essentially we're talking about the same ratio. It was about 70 percent of the health care dollar in the early 1960s was spent on chronic illness. And no matter how many voices were yelling in the wilderness, no one was paying very much attention.

I'm glad to see people are now on it, but I wonder how come it exploded as an interest other the fact that it's costing more money that it used to in terms of real dollars.

And the other point I have for Dr. Finkelstein is, we're dealing with sociology, and what do you think the impact was on having phys ed cut out of virtually every school system in the United States because it cost too much money to have gym?

There were generations who learned that exercise was part of your life, because like it or not, you started in second grade.

Carolyn Clancy: I think the why now question is quite interesting, and I'm not sure I know all the answers. I think the work of Ed Wagner and others trying to be as explicit as possible about what health care could do to address those issues. I think there's also been an accumulating, how would I say, critical mass of information and a sense of how important this is as life expectancy has continued to increase. When you look at the 20th century, as Paul pointed out, that is huge, and therefore, the number of people we're talking about and the magnitude is so much larger. Beyond that, I don't know, that might need to be the subject of another session.

Paul Ginsburg: Actually, one thought I have is, the combination of medical care on the one hand, when done well, can really be much more effective when dealing with chronic disease than in the past, but unfortunately, the cutting edge of medicine is hard to do well, and which gets into all of our issues about the delivery of care. Do you want to take a crack at the gym?

Eric Finkelstein: Yeah; I wasn't alive, so I really probably shouldn't say. I don't know what was going on in 1960 - although I will say health care as a percent of GDP has more than doubled, and I think that's probably been a significant factor on why this is at the forefront for employers and governments.

With respect to your comment about physical education, I think you could make an equally important statement about what we're feeding our kids in school, in effect, a host of things we're doing with kids. And, in fact, I really have come to the conclusion that I think for the government's role on obesity, the government has a role for consumer protection of kids, for sure, and we force kids to go to school, we don't let them drink, we don't let them smoke, we have a host of regulation that we think is appropriate for kids and not appropriate for adults.

So when kids become old enough to make informed choices, they may grow up and become overweight or obese adults like my Uncle Al, and my feeling is, that might be okay, but while they're young and before they can make rational choices, we need to set them off on the right path.

And so I think that, you know, government's role should be to make sure that these kids get physical activity and get a healthy meal at school while they can, and then set them on the right path, and then when they become adults and decide to make choices, some of which may be obesity promoting, those are their choices and we should live with it, but while they're young, that's where the government should make, you know, the strongest case for obesity prevention efforts.

Paul Ginsburg: Okay. I've got a question on a card for Eric. And this question is referring to the role of the sedentary jobs, and the questioner asks, how could an office job incorporate accidental physical activity, and how does policy address activity in the workplace?

Eric Finkelstein: I think that's a pretty tough question. In fact, Dr. Goetzel may talk a little bit more about that in the next session. I think the reality is, it's going to be pretty hard for most occupations. I mean I've heard about the treadmill work station, but I suspect that's unlikely to be at most desks anytime soon.

There are some things, and I'll let Dr. Goetzel talk more to these, but there are certainly environmental change, things going on in the work site but I think we're not going to reengineer the work site to a place where you're going to be sweating off the pounds.

It will essentially potentially make it easier and cheaper to engage in some level of activity. In fact, you know, for example, I often times will have meetings where we'll go for a walk around the campus, because my company just put in a walking trail, I mean things like that that aren't going to change obesity rates from, you know, 33 percent down to 3 percent, but they might change them from 33 percent to 32 percent, and, you know, maybe those marginal changes over a long enough period of time could have some impact.

Carolyn Poplin: Hi, I'm Dr. Carolyn Poplin, I'm a general internist, and I came in late, so forgive me if you've already covered this. But I talk about diet and exercise until I'm blue in the face. I was born in 1947. When we were growing up, we walked to school, not because it was good for us, but because it was the only way to get there, lots of people did manual labor, my mother stayed home and cooked, so there was very little fast food available.

I think this has a lot more to do with the government restructuring our society in ways where the default, so to speak, will be walking, more public transportation, less parking, more places to - sidewalks and places to walk to. I mean these are things that can only be done by government.

There's also the Agriculture Department which has put out - which has changed a food pyramid, so it's a vertically striped thing, it kind of defeats the whole message, and it's a function of the influence of the food industry, and that's easy to change and should be changed right away. But there's a lot that's not medical. When you have to take time out of your day to exercise, instead of it being an unavoidable part of your day, then people don't exercise - some people exercise because they want to, but most people exercise because they have no choice.

Paul Ginsburg: Thank you. Anyone want to comment on that?

Carolyn Clancy: I guess the only comment I'd make is to say thank you, but also that it strikes me that when Eric talks about government policies, you're talking about cross department kinds of strategies. This won't be because HHS or any one single department does that. I don't think our track record is all that terrific in terms of sustained activity across cabinet departments, which doesn't mean that it couldn't be, we're certainly seeing that in some other developed countries now.

Caroline Poplin: I mean think about road building, they say the place where the BMI is lowest is in Manhattan.

Paul Ginsburg: Yes, sir.

David Rabin: David Rabin, Georgetown; Dr. Clancy, what do we know about chronic disease control under other health systems of other nations, and what can you - if there are differences and better control - what characteristics of those systems are ones which are associated with better control of chronic disease?

Carolyn Clancy: You know, the Commonwealth Fund has done a number of surveys of multiple developed nations, either five or seven countries, and will have another one coming out this fall as I understand it, and they've been highly instructive.

In some cases, the U.S. doesn't look as great in terms of the proportion of docs who have electronic health records, which we think could be very helpful here and so forth. But I have to tell you, I'm really much more struck by how similar these countries look. So I do see this as kind of a global challenge.

Melanie Fagen: Melanie Fagen with the American Medical Group Association, and this is for Dr. Finkelstein. You mentioned agricultural subsidies and I just wanted to ask about your opinion on the recent farm bill that passed and the DOD fresh fruit and vegetable program. Do you think this is something that's effective in schools, do you think we'll see a difference in obesity? And in - with subsidies, which ones would you reduce and which would you increase, and could you touch on corn?

Eric Finkelstein: Yeah, a bunch of questions, and I think you probably outlined a research agenda that could keep us going for quite a while. I think, first off, obesity is so multi-faceted and there are so many influences that impact how much kids eat and exercise and all those factors, so I think we first probably need to step back and look at how do changes to the school food environment, for example, impact kids' caloric consumption, let alone obesity rates and I think we need to first really take a hard look at that.

And I think the evidence base for all these things is really weak, and so we really need to do some serious research and figure out where are the leverage points to really influence kids and what impact will these things really have.

In fact, just as an example, there's a study that shows that kids gain more weight in the summer than they do during the school year, which if that's true, it says something about how they maybe are eating healthier at school than they are at home or getting more physical activity. So lots of research really needs to be done. And I don't think we have the answer to all of those questions.

But with respect to the subsidy policy, I mean subsidies are put in place for a whole host of reasons, right, protection for our farmers - lots of reasons, and so it's hard to say, you know, the obvious answer is, oh my God, corn prices have been so low for so long - we need to do away with those subsidies.

And that seems, on the face of it, certainly when you're thinking about obesity, pretty reasonable. But I guess part of what I'm trying to say is that we need to think about obesity as a piece of a much larger problem, and it may be that there are very good reasons for protecting our farmers or keeping these subsides in place, and it may not be, but all I'm saying is, I don't think it's so easy that we need to reduce these subsidies because of these rising rates of obesity, because there are lots of other factors why government may or may not think these subsidies are appropriate. But I will say the subsidies should be on a long list of things that government really should be taking a hard look at and saying, you know, these things made a lot of sense a few decades back when they were implemented, the world has changed, are they still appropriate, and I think we need to be systematically answering a whole host of those questions across governments -- state, local, and federal -- and thinking about whether these things do make sense today. I hope that's a little bit helpful.

Paul Ginsburg: Okay, yes.

Sarah Thomas: Hi, I'm Sarah Thomas with AARP's Public Policy Institute, and this question is for Dr. Clancy. I was particularly interested in these elder learning networks, and my question is, have you seen results so far, and if it's too soon, what kinds of indicators would you look for of success?

Carolyn Clancy: Thank you for the question, and I can promise you that Chris Williams will be happy to come chat with you anytime; she's very, very excited about this. So far what we're seeing is communities actually taking the data, and we're providing a lot of technical assistance for that, and literally mapping out very empirically based plans, and they simply have not had the capacity to do that. I think in another year we'll have some sense of early traction. But I would also say that one of our big challenges is knowing what are the key intervention points, how would we know if we're making progress at any level from looking at a panel of patients, to a community, to even looking at NHANES. I mean what we can see, for example, from Eric's data is, for obesity, we're going the wrong way, but that doesn't mean that any of the questions that he's articulated, we've got any answers to.

Is it all because we don't have gym anymore? And I actually think that's very true for chronic illness, as well. So we've got a kind of artificial practical thing of looking at quality measures once a year or whatever. We have absolutely no basis for that except people can change plans once a year, so that feels like a good time to do it.

But we really don't know, and we don't know how to identify subgroups of people with chronic illnesses who would benefit from intensive intervention and what kind, and I'm quite confident that Melanie Bella will be addressing some of this.

Sarah Thomas: Thanks.

Paul Ginsburg: Thank you. And we've got time for one last question; sir.

Josh Seidman: Josh Seidman from the Center for Information Therapy. There was a slide from each of your presentations that potentially might conflict with each other, but it may just be that clarification needs to be made.

In Dr. Finkelstein's presentation, you made the point that information campaigns are unlikely to have large impacts. Dr. Clancy had a slide that, the graphic, the 21st century health care slide, where one of the key points at the bottom of the circle was that actionable information available to clinicians and patients just in time, I presume that to mean that it was a critical factor in improving chronic care delivery. And certainly there is research from Ed Wagner and the chronic care models work to suggest certainly that timely, actionable, targeted, tailored information certainly is, and I just wanted to see if you were talking more about generic public education campaigns or if there is some disagreement there?

Paul Ginsburg: Yes, actually I think it's clear that they're not in conflict, but I'll let them explain.

Carolyn Clancy: Yes, I think the key word is actionable. I mean if making people feel guilty about obesity was going to work, I think we'd start to see some dramatic declines. Clearly there is lots and lots of information about the problem. And I have to tell you the number one topic or line of research that we get calls for is on bariatric surgery, bingo. You know, a statistical brief goes up and instantly the phones and email start going.

I don't know that we know enough to say what's actionable, so that diagram is somewhat conceptual. What's pretty clear is, I am seeing some leading edge health care systems that not only have electronic health records, but actually an internal strategy, begin to shift the content of an encounter from one that says, let's see Paul, right, so why are you here today, Paul, as you're flipping through a chart and remembering that Paul has diabetes and so forth, to actually a patient walks in with a chart and a map about where they are, where they've had challenges and so forth.

I mean I think that's a very early and promising kind of development. Most systems actually don't have that kind of infrastructure, but that's sort of what I'm imagining in the future.

Eric Finkelstein: I think you asked a great question. And let me give you sort of three anecdotes that sort of gives you my thinking on this. One is, you remember my little story in the beginning about these women in the program who were clearly told of their risk factors for heart disease conditions, and a year later they didn't even remember they were ever even told. I mean telling these women certainly didn't seem to have much of an impact.

If you look at what really worked to reduce smoking rates, as a second example, the general consensus is that the biggest single factor was cigarette taxes that got people to reduce smoking rates, and second to that was legislation about workplace and other smoking bans.

And so information had a role, but the evidence - in fact, Jon Gruber makes the point that he thinks nearly all of the reductions in smoking rates could be explained by taxes. I'm not going to go that far. But certainly, I think these other factors played a big role. For obesity, I make the point that, or I believe, at least, that most people, by the time they get to be 30 or 35, probably already know that they have a weight problem and so telling them about their weight problem isn't going to make much of an impact. And, in fact, I have a published paper which I think would be great if you guys could take a look at which we actually asked obese people to rate their risk factors for obesity-related conditions, as well as their life expectancy, and what we found was that, compared to normal weight people, overweight and obese people clearly knew that their weight was putting them at an increased risk for a disease, and, in fact, they overestimated, based on the latest data, the mortality effect.

And so I take this evidence to suggest that people already know that obesity is bad for them, and they probably already know that their weight is a problem, but my feeling is, they also know, and probably have failed many times at trying to lose weight. And so just telling them, you need to lose weight, being obese is bad for you, isn't going to make a difference.

You need to change the environment, change the cost and benefits of these behaviors if you want to get sustained changes in behavior, and so that's really where my statement comes from.

Josh Seidman: Right, or the information needs to be more specific to the actions that can be taken to -

Eric Finkelstein: It's a necessary, but not sufficient condition maybe is a better way to say it.

Paul Ginsburg: In fact, another thought on that is that information - the impact is not going to be on individuals changing their behavior as much as setting the stage for the other public policy interventions that may be more effective, because, you know, clearly, it took a long time, and it's still going on, to build the political support for the anti-tobacco rules that keep getting more and more stringent, like not allowing smoking in restaurants, and maybe we ought to think about more general public information about the down side of obesity as not so much influencing a lot of individuals, but influencing the policy environment for steps the government can take.

So we've run to the end of our time for this session, it worked out perfectly. Please thank the panelists. And at 10:15, or 10:17, we'll start the next session.

(Recess)

Paul Ginsburg: Okay. I'd like to ask you to take your seats and we'll start the second panel. And now that we have a better understanding of the causes, the cost, and the consequences of rising rates of chronic conditions, our second panel is going to explore the role of different stakeholders -- employers, health plans, patients, Medicare, Medicaid, and physicians and hospitals in preventing chronic conditions and improving the care of people with chronic conditions.

Our first speaker is Melanie Bella, who's Senior Vice President in the Center for Health Care Strategies and a former Director of the Indiana Medicaid Program. She's going to speak about public-sector perspectives on these issues.

Then we'll hear from Dr. Ron Goetzel, Director of the Emory University Institute for Health and Productivity Studies and Vice President of Consulting and Applied Research for Thomson Reuters Healthcare, who's going to look at the private sector's role, primarily health plans and employers.

He'll be followed by Dr. Michele Heisler, an Associate Professor of Medicine at the University of Michigan and a Research Scientist with the Veterans Administration's Health Services Research and Development Center of Excellence, who's going to talk about how the health care system could be redesigned to better serve patients with chronic conditions.

And lastly we'll hear from Dr. Kristin Carman, Co-Director of the Health Policy and Research Program at the American Institutes for Research, about the role of patients and some of the barriers that they face in accepting evidence- based health care and improving health care. Melanie.

Melanie Bella: Good morning. My name is Melanie Bella; I appreciate the chance to be here this morning. As was mentioned, I'm with the Center for Health Care Strategies. For those of you not familiar with that organization, we are a non-profit health policy group in New Jersey. Like HSC, one of our major funders is the Robert Wood Johnson Foundation. And we work primarily in three areas, one is quality improvement, the second is reducing racial and ethnic disparities, and the third is improving care for complex and special populations. So it is in that area of complex and special populations that I do the majority of my work, all focused on helping state Medicaid programs become better purchasers of care for those beneficiaries that have the most complex and costly needs in the program. So I am thrilled to be here today to talk to you about the public-sector perspective. And while that will be rooted in Medicaid, I very much hope to convey that what we see in the Medicaid population is very relevant to Medicare, it's very relevant to state employee plans, and to some of the higher cost portions of commercial populations, as well.

So as Dr. Clancy mentioned, the prevalence of chronic conditions is obviously significant in Medicaid. It's very significant with high need folks. The majority of people have more than one chronic condition, this is no surprise.

I think it's worth noting that we have what we call the really high need beneficiaries, there are dual eligibles. Seven million people out of 55 million people on Medicaid are driving 42 percent of cost in Medicaid and close to 25 percent of cost in Medicare, so that's pretty significant if you think about it from the role of the public sector and the public purchaser.

And then we have really high costs. So you've all heard about the 5/50 - the 80/20 usually, we're talking 80/20, 20 percent of people driving 80 percent of cost. In Medicaid it's really the 5/50. So a little under 5 percent of people are driving 50 percent of the cost. Among the most expensive 1 percent of those beneficiaries, 83 percent have three or more chronic conditions and 60 percent have five or more chronic conditions.

So you might all look at this and think, this is a train wreck, what is in the world are we going to do about this. We look at this and say Medicaid is the land of opportunity. There is no better place to tackle chronic illness than in Medicaid.

By virtue of the purchasing leverage that Medicaid and Medicare combined have as purchasers of publicly financed care, and the complexity of the patient population, it's a tremendous area to make a difference and to begin to learn what's going to impact both quality and cost outcomes.

So this is something, again, you're all familiar with, but it just - it's the cost curve showing really the distribution of the cost and that a very, very small percentage of the population is driving a very large portion of the cost. And that's not to say that we want to focus entirely on the tail, the high right end, ideally we're at a point where we're keeping people in the middle from becoming on that high end. But right now I'd say public purchasers have their hands full just managing some of the high cost folks.

So as Dr. Clancy also mentioned, we've been doing a lot of work looking at clustering of chronic conditions. So there's always been a lot of discussion about the fact that in Medicaid and Medicare, there are a lot of co-morbidities, but very little information available on exactly how do those chronic conditions cluster.

And so we partnered with some folks, Rick Kronick and colleagues at the University of California, San Diego, to do what we call a cluster analysis, which is produced in a report called the Faces of Medicaid II. It's available on our Web site; I encourage you to take a look. And the purpose was to help understand, to break down the complexity of chronic conditions within a Medicaid population, and to take a national data set made available to us by CMS and begin to look for patterns of chronic conditions. And the point again, Medicaid and Medicare have realized you cannot do the single disease focus siloed disease management programs, yet trying to figure out how to go from that all the way to a program that's going to be, you know, responsive and nimble to every single beneficiary's needs regardless of the set of chronic conditions was fairly overwhelming.

And so in an incremental step of breaking down the complexity, what this does, the Faces of Medicaid, and this is just one example, is goes in and looks for clusterings of chronic conditions.

So, for example, what you have here is, we did things in dyads and triads, if you will, pairs and sets of chronic conditions. And this one shows you the top five triads among the most expensive 5 percent of patients in Medicaid. So what we hope to use these tools to do is to help purchasers as they're designing programs that they either want to implement in house or they want to contract with partners to go implement, help them understand, how do you break apart populations into subsets that can be better managed, and better managed by tailoring programs to better fit their needs.

And so, again, I would encourage you to take a look at this. It's just one way of doing it, but we've got to think about how do we break down the complexity and how do we begin to realize this is a very heterogeneous population and what are reasonable ways to think about developing cohorts to whom you may be able to map interventions that are better tailored to their needs.

So let's talk a little bit about public-sector challenges. The majority of folks in Medicare and Medicaid who are the highest cost and have the highest needs, with the exception maybe of some in Medicare that are being served through special needs plans, are still in a very fragmented, uncoordinated fee-for-service system. The very folks who need it the most are stuck, arguably in the worst place, and that's something that the public sector has a role in developing systems of care that are going to better manage the quality and cost of the folks who need it the most.

Reimbursement is generally insufficient to support what we're asking people to do. This is a widely known fact in Medicaid in particular. It is no secret that Medicaid is not the best payer, and that the payment policies are difficult to do some of the prevent - definitely to do the prevention that was discussed in the earlier panel, and also to do some of the more complex care management. And this is particularly evident as states are rolling out medical homes, complex or advanced medical homes, and struggling both with state fiscal challenges, but quite honestly, also with CMS regulatory challenges about how to finance those medical homes and how to monitor them and measure their performance.

The Medicaid financing structure makes it difficult to invest in long term solutions, so as opposed to some of the federally funded programs, states can't run deficits, and when they need to get money to support some of these things, generally they have pressure to show a pay back within 12 months.

Well, that's obviously, as all of you in this room know, very difficult to accomplish, particularly when it requires investments in those very things that are going to make a difference. And so working with the federal partners and others to figure out creative ways to have some of that investment available up front, recognizing that it may take a longer time horizon to see some of those returns is really critical.

One of the biggest disappointments is to see a lot of the investments that have been made in Medicaid to date, but the plug gets pulled before we've really I think had a chance to see if the program is going to be successful, because it's taking longer than people have to demonstrate results, particularly on the financial side, and that's a real shame, because we could really I think make a difference in if there's a long enough time horizon.

And then lastly, I could go on and on and on about this for hours, but since I only have ten minutes, I'll just say a personal obsession of mine, dual eligibles, and a huge frustration on both sides, Medicaid and Medicare, about the misalignment of the financial incentives. And that is the best example of where bad policy and bad financial systems impact folks who need care for the chronic illnesses that we're talking about today.

So in the majority of Medicaid programs, dual eligibles are excluded from any chronic disease programs because the investment Medicaid makes generally is returned through reduction in hospitalization which accrues to Medicare.

And so those are some things that we just need to start dealing with when we think about how the public sector could contribute to helping alleviate some of the problems and burdens of chronic illness. So what are states doing? I love coming to D.C. because usually Medicaid is thought of as this mismanaged black hole and this awful drain on the system. And again, going back to Medicaid as the land of opportunity, states are great laboratories for innovation. There are incredible things going on in state Medicaid programs focused on the very population that you're talking about today, and getting the word out about that and figuring out how can we use those natural experiments that are going on today to help fuel the evidence based, to help fuel our information about these very difficult populations is critical.

So states -- there's a lot of focus right now on high-need, high-cost beneficiaries. This is very typical to what's going on in the commercial world. But states are identifying and stratifying these populations. I'd say you've seen a lot of movement in both Medicaid and Medicare, recognizing that we need to focus on identifying and stratifying those patients that we think have - we have an ability to impact their utilization and their behavior as opposed to one-size-fits-all blanket care coordination approaches.

There's much more activity in developing tailored care management interventions and new performance measures. The populations that we're talking about today that have significant acute care needs, not to mention severe mental illness, substance abuse, long term care, physical and developmental disabilities, don't fit within the current measurement sets, or fit, but the current measurement sets aren't enough, and so we need to do some work in that area. And then new financing is being tested in Medicaid and I'll talk a little bit about that.

Again, a little bit more about what states are doing. Fortunately, there is a huge focus on transitioning those folks who I mentioned earlier that are - I call them stuck in fee for service. Transitioning them into other systems of care, this doesn't necessarily mean traditional managed care as you know it, it means that there is some system and entity that is being held accountable for putting together programs that are intended to improve health outcomes and to improve cost.

There's a tremendous focus on physical health and behavioral health integration. I would say that spans everything from co-location to coordination to integration and then some information sharing. But given the prevalence of mental illness, particularly severe mental illness in Medicaid, and also with the overlap in the duals, this is a tremendous area of focus. There also is a lot of energy behind full risk, well, behind different kinds of models in Medicaid. So for the aged and disabled beneficiaries, I think there is some caution into what sort of model, what sort of program to create, and so there's a lot of emergence of non-capitated models, administrative services organizations, care management entities coming in, again, having some accountability for improving clinical and financial outcomes, but not carrying all the financial risk, at least not on day one, because of the complexity of the population and the need to take it slowly and get it right.

There's a lot of activity in integrating care for dual eligibles. Most noticeably and probably most talked about, has to do with arrangements with special needs plans. And, obviously, there's a lot of attention these days to requiring contracts with states over a set period of time for special needs plans.

While that's great, to try to think about how can we have a relationship for a beneficiary where that beneficiary is getting the benefits from the same entity, there are lots of states out there that don't or won't ever have managed care on Medicaid or Medicare side, and so we need options other than special needs plans, as well, to fuel integration across the country. And there's some discussion of gainsharing opportunities, so some plans in states are in conversations about gainsharing for improved care outcomes for the dual eligibles.

I'm just going to give you a snapshot of two of the learning laboratories; one is New York and one is Colorado. They're both pretty different places. I love it when I go to New York, because when I was a Medicaid Director in Indiana, I think my whole budget was $5 billion, and that's just a rounding error in New York. I mean the magnitude of spending there is just tremendous. And, you know, we're talking $45 billion spent in New York.

And if you look at this first bullet, 20 percent of those beneficiaries are driving 75 percent of that $45 billion. Again, think, land of opportunity, tremendous opportunity.

I've listed there where their high cost beneficiaries, you know, six main categories, they will not be a surprise to you. One of the things that New York is doing is something called Chronic Illness Demonstration Projects, where New York will be providing funding to comprehensive provider-based entities to manage the care of the highest risk beneficiaries that are in fee for service, it's a pretty exciting program. Colorado Medicaid, a similar story, 20 percent of folks are driving 77 percent of cost, 40 percent of those have multiple chronic conditions. Colorado has just implemented something called the Colorado Regional Integrated Care Collaborative, which is working with a health plan partner to take the top 20 percent of high-cost, high-risk folks in Colorado and manage them.

It includes wrapping around the high-volume practice sites with on the ground care managers, pretty exciting, as well.

I want to say also, both of these include a rigorous evaluation, where we have random assignment, so there will be a treatment and a control group to begin to tease out what is working in these places.

Promising new opportunities, and I know that my time is running short, so let me just say something that we're referring to as the Faces of Medicaid 2.5. I mentioned before looking at clusterings of chronic conditions; the information in Faces of Medicaid was really helpful, but it doesn't take it necessarily to a level detailed enough for a clinician or a care manager or a caregiver to make actionable, because it relies on a diagnostic classification system that is essentially cardiovascular, for example. Well, cardiovascular can mean so many different things that we need to take it to the next level. So many of you may be familiar with the work of Cynthia Boyd and colleagues and Hopkins, and we have engaged Hopkins to do what we're calling - to identify concordant and discordant treatment conditions. So they will be going in and looking at the clusterings of chronic conditions and separating out those conditions into those that have concordant treatment patterns and those that have discordant treatment patterns.

And this is, again, an attempt to help Medicaid figure out how do we want to prioritize these conditions and how can we better think about someone who has cancer and diabetes, how might we need something different than someone that has heart disease and diabetes, for example, in terms of treatment patterns.

This is something that could be very relevant to the Medicare population and to other high-risk populations, as well. We're also throwing in pharmacy and Medicare data. So thanks to CMS, we will be able to link Medicaid and Medicare data to begin to get a better picture on the duals. I'll talk a little bit about a national research agenda. Medicare has certainly contributed to the learning with all the demonstrations and the pilots. Medicaid has not been able to do similar - have similar support at a national level for demonstrations and pilots. And there are efforts underway to begin to have much more rigorous evaluations in Medicaid and to begin to develop what we're calling a rapid learning network, so fitting in with what the IOM and others are doing in Medicare to bring that to Medicaid, as well.

The patient populations we're talking about that have this chronic illness in Medicaid aren't in the evidence base, they're not in the clinical trial, so how do we develop a rapid learning network that lets us take observational analysis, mathematical modeling, you know, use the tremendous wealth of data at our fingertips within Medicaid and Medicare to begin to tell a story about what's working short of waiting three to five years for randomized controlled trials if we can't always get them.

And then Medicaid purchaser leverage, again, beyond the dream that Medicaid and Medicare will work together as public purchasers, there are places where Medicaid and the large commercial entities are coming together to do multi-payer initiatives for medical homes, for example. So agreeing upon a definition of standardization and a payment for medical homes so you can begin to aggregate. You can see how that could be built into working on areas of certain chronic disease priorities, as well.

And the last is, a lot of the reason why we're able to go do all this - do all the things on the high cost chronically ill today is because probably every other governor, if not two-thirds of the governors, have all announced coverage expansions. And so the linkage between getting control over the high-cost folks in Medicaid and freeing up dollars to use for coverage expansions, it provides some great momentum.

And so right now we feel like there's a lot of opportunity to, again, use the complexity of the patient populations in both Medicaid and Medicare as a reason to be able to go do some of the other policy initiatives that are of interest across the country.

Now, I think the jury is still out on whether any of this is working. But certainly doing it in a more structured way and trying to provide some evidence is a first step. So, again, I realize this was pretty grounded in Medicaid, but I do think it's relevant and that there's a tremendous opportunity for the public sector to contribute to the solution and not just be part of the challenge. So thank you very much.

Ron Goetzel: Hi, good morning. I'm Ron Goetzel; I want to thank Dr. Ginsburg and the Center for Studying Health System Change for inviting me to talk this morning. I'm going to be focusing primarily on the employer role. During the Q and A, we may have an opportunity to talk about health plans and what their contribution is in terms of prevention and health promotion and how they're working with employers.

But I've been working with employers for about 25 years now, and many of the innovations that have come about in health care have started in the employer sector. If you think about quality initiatives, HEDIS, prevention of mistakes, managed care initiatives, health and productivity activities, all of those really found their birth in employer experiments, which in many ways have grown and expanded and become part of the landscape and the culture of health care delivery in this country.

There is much more of a movement today focused on health promotion and disease prevention as part of a broad health and productivity management umbrella, and that does include health and safety issues, it does include disease management, chronic care management and so forth, and it is an attempt to be much more coordinated in the care of workers. And if you think about it, you know, everyone in this room, I think, is employed, so about 95 percent of the working age population who wants to work is actually now employed, and that represents somewhere around 160 million Americans in the United States today.

And there's a lot of innovation going on in the employer sector, and I think we can learn from their experience, but also there are a number of policy implications that we can take away from that experience and apply more broadly.

So I'll start with, you know, the picture of the woman with the huge headache, and she's worried about our spending on health care, this is, you know, a figure you're all familiar with, two and a quarter trillion dollars, private sector spending a little over half of the amount of that, health care expenditures increasing, you know, the latest figure is somewhere around 7 percent, and health care as a part of GDP being roughly 16 percent, but it's going to increase dramatically in the next few years. This is what it looks like from an employer perspective. These are the estimated annual premiums that employers are paying, roughly around $8,000 a year for 2007. And a question, of course, is, why is health care so expensive, why is it rising so dramatically.

This is a picture of my boss at Emory, Ken Thorpe. A requirement of my contract is that for every presentation I make, I've got to have a picture of my boss somewhere in that presentation, so he's there.

He's done a lot of research in this area, and bottom line, he's shown that about 37 percent of the rise in health care expenditures is due to increased spending for treated diseases, and innovations, and advancing technologies.

And we have a list here, I'm not going to go through all of, in terms of all the great things that have happened in the last 15 - 20 years in terms of improved technology and care for the treatment of chronic disease and otherwise, as well as establishing new thresholds for treatments. You know, the mention earlier about children receiving statins, well, you know, that's yet an expansion of the kinds of care and the amount of care that we're providing. And, of course, down at the bottom is waste. Waste continues to be a problem, because currently, by and large, the way health care system is organized in the United States is that the more you do, the more you get paid, and until recently, the more mistakes you made, the more you got paid for that, as well.

So as Alain Enthoven says, you know, a key to the solution is to make the system more efficient and more effective, absolutely. But that's only going to take care of 37 percent of the problem; 63 percent is what Dr. Finkelstein talked about, which is a rise in prevalence of disease, and huge amount of payments that we're making for the care of chronic disease, and 27 percent of the total increase in the rise in health care costs being due specifically to obesity.

And again, I won't repeat the statistics that were presented earlier, but we can see a tremendous growth in obesity rates, partially due to individual factors, but largely due to environmental factors, and if we have time, I can talk about what the employer community is doing to change the environment and ecology of the work place to address that. So most employers are saying what do I do, and there's a long list of things that they're trying, from managing disease, disability, absence, health demand, stress incentives and so forth, a long list of different interventions. A question, of course, is, an empirical one, do any of these things actually work, you know, do they make a difference. And there's very little real world research that has examined these types of interventions programs in employer settings to test whether they are effective in improving health and saving money.

The what to do list, this is the latest what to do list that was created by the National Business Group on Health, it has number two on the list, and that's been promoted from number five before. Number two is they actively promote health improvement programs and resources.

And so we're seeing a sea change in terms of the number of employers that are beginning to think about and implement these kinds of programs in the workplace. The main problem out there is that they don't know how to do it and they don't know how to do it well, and there's a lot of bad doing of these kinds of programs.

In fact, a study that was just released that looked at employer efforts and health promotion disease prevention showed that even though roughly 90 percent of employers report that they have health promotion programs in place, when you look at the categories and the ways in which these programs ought to be structured in terms of their comprehensiveness, the actual number is closer to 7 percent. And so there's a lot of stuff, a lot of activity going on out there, but most of it is actually not very effective.

So you can scratch your head, and if you're in the elevator with the CEO and CFO and they ask what you're doing, you can say, well, doesn't it seem logical that if you improve the health and wellbeing of your employees, their quality of life improves, health utilization is reduced, disability is controlled, and productivity is enhanced. And for most people, that does seem very, very logical and intuitive.

There is strong evidence that these things do work, and it's a progression, a logic flow of evidence. Very little doubt and hesitation with the first bullet that says, a large proportion of diseases and disorders is preventable, modifiable health risk factors are precursors to a large number of diseases and disorders and to premature death.

We literally have tens of thousands of epidemiological studies published week in and week out in JAMA, New England Journal of Medicine, that confirmed that relationship. Many modifiable health risk factors are associated with increased health care costs within a relatively short time window; again, there's a growing body of evidence that that's true.

Modifiable health risk factors can be improved through workplace-sponsored health promotion, disease prevention programs. That evidence is also growing. In fact, the latest set of research and compilation of research was released last year by the CDC Community Guide Task Force, and they essentially came to the conclusion that there is strong and sufficient evidence that many of these workplace health promotion programs do have a positive impact on behavioral, biometric and financial outcomes.

Next, improvements in the health risk profile populations can lead to reductions in cost. Some seminal work by D. Edington, University of Michigan, other work, some work we've done, has shown that relationship, although it's not as strong as the earlier bullet. And then the evidence that these programs, if they're evidence-based and properly implemented, can actually produce ROI, return on investment, and there is a growing body of evidence there. I'll just share some of the evidence in a couple of minutes on that. There's no question that diseases are caused, at least partially, by lifestyle. And we have here a list of the lifestyle factors and all the consequences of diseases that follow.

For the employer, this also costs them money. Now, it costs them money on many dimensions. It costs them money in terms of direct medical costs, absence and work loss, presenteeism, which is on-the-job productivity loss. This is when people are physically present, but mentally or otherwise, they're not there performing at optimal levels simply because of certain risk factors or health conditions that are impeding optimal performance, and then the risk factors that precede all of these.

We've done several top ten research studies where we've looked on a per capita basis at what are the most expensive health conditions that affect employers. This is one that connects medical absence and disability. And as you can see, on a per capita basis, it's angina, hypertension, diabetes, low-back disorders, AMI, COPD, obviously conditions that have huge lifestyle components associated with them. And it's not just medical, but it's also absence and disability. And then if you expand the view and bring in the notion of presenteeism, again, people going to work, having certain health conditions, but their productivity at work is impeded simply because these conditions are not well managed, you can see that the costs rise quite dramatically.

And, in fact, our estimates are that for every dollar, about 60 percent of that dollar is actually linked back to presenteeism losses.

And in terms of the precursors, the risk factors that predict these increased costs, this is a study we did with 46,000 employees called the Hero Study, which looked at ten modifiable risk factors, looked at independently, and it was psychosocial factors, depression and stress, that were most expensive compared to the other conditions. But if you look at them in aggregate, about 25 percent of these employers' costs were linked to these ten modifiable health risk factors.

Some examples of case studies, where the organization has looked at the health and economic consequences, I'm going to be focusing primarily on the economic consequences, not so much on the health consequences, although in each of these studies we've published papers that have looked at health impacts, as well as financial impacts. Citibank, a study done back in the '90's, 48,000 employees eligible for the program. Program savings, when you compare participants and non-participants, roughly $1.9 million. I'm sorry, that was program expense, $1.9 million, program benefits $8.9 million, so a net savings of $7 million from that program, and a return on investment of $4.70 for every dollar invested.

Johnson and Johnson, the granddaddy of health promotion programs, started back in the 1970s, and continually upgrading and innovating in terms of the design of their programs; in fact, most recently providing a very substantial financial incentive to participate in the program, $500 incentive to participate, which actually doesn't cost Johnson and Johnson a penny because the premiums are based upon that $500 incentive already built into the calculation. So it's really the non-participants who are being taxed $500 for not participating.

And that produced for them 94 percent participation rates. The 90-plus percent participation rates are becoming much more common as these kinds of benefit plan designs are structured so that there is a very substantial incentive to participate in the programs. In Johnson and Johnson's case, about a $225 per employee per year savings, which actually grew incrementally over time. Procter and Gamble, Cincinnati, Ohio, 8,000 employees there in headquarters, 4,000 in the intervention, 4,000 in the comparison group, and after three years, a 29 percent difference in total medical expenditures between participants and non-participants.

Most recently we published a study with HighMark in Pennsylvania, where we looked at a very comprehensive program targeted at 12,000 HighMark employees, on average saved $176 and a half dollars per employee per year, and this is what the trend line looked like in terms of participants and non-participants, which were very, very closely matched to one another using propensity score methods. Over the four-year intervention period, the return on investment on a cumulative basis was roughly $1.65 saved for every dollar invested.

So what are some policy implications? And what's interesting here is that these experiments were not government mandated programs, these are not taxable programs, these are not things - regulations that the government imposed, but essentially employers taking the initiative to introduce these programs and to fine tune and experiment and develop these programs based upon their experience and the experience of others. However, there are some policy implications out there that we can consider. For example, number one on the list is to pass Tom Harkins Health Work Force Act. And what this act would do is provide companies financial incentives, tax credits of up to $400 per employee per year, so that when they institute bona fide health promotion programs, they could get back that kind of credit for that investment.

That credit would be reduced in year two, and then actually disappear, moving forward. But it would be a significant incentive for employers to invest in these kinds of programs because they can realize a very quick return on their investment in terms of a tax credit.

There are other bills out there that would provide financial incentives and tax credits, not just at the employer level, but also at the employee level, so that they could, for example, get a credit or a deduction for a