Dive Brief:
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Chronic medical conditions will hamper U.S. economic growth in the coming years by continuing to diminish productivity, contributing to early retirement and premature mortality and draining resources and income for those affected and the larger system as a whole, according to a new report from Fitch Solutions.
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Healthcare costs associated with diabetic patients are more than double that of healthy Americans. Nearly one-third of diabetes-related costs are hospitalizations and prescription drugs, each. Also, nearly half of Americans has at least one cardiovascular disease. The economic burden of cardiovascular disease alone is expected to double by 2035 to more than $1.1 trillion.
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In response to these growing costs, more stakeholders will use health technology assessments and pharmacoeconomics, Fitch Solutions said. Pharmaceutical and medical device companies that focus on value-based solutions to these medical issues should benefit from high prices and "favorable" payer reimbursements.
Dive Insight:
Fitch Solutions highlighted how the six leading chronic illnesses — diabetes, cardiovascular disease, arthritis, Alzheimer's disease, obesity and cancer — are affecting healthcare costs and the added burden in the future. Fitch Solutions is a division of New York City-based Fitch Group, which also runs credit rating agency Fitch Ratings.
These leading conditions cost more than $1 trillion annually through hospitalizations, doctor visits, prescription drugs, medical devices and home care — 6% of GDP in 2016.
Those costs aren't contained only to patients or payers. Fitch Solutions said the spend is spread across society through medical treatments, less productivity, early retirement and premature death. Indirect costs through loss of income and reduced productivity cost $3.7 trillion, according to the report, and will double in 30 years due to the aging U.S. population and the resulting hike in non-communicable diseases.
Chronic illness is a significant cost burden, especially for Medicare. Payers are trying to bend that cost curve by implementing population health programs, value-based care programs and telehealth tools. Healthcare stakeholders hope to engage patients before they develop a chronic illness, or at least help them manage the health issues.
Value-based contracting is potential solution that incentivizes providers to focus on the whole patient rather than the individual services offered.
The recent Integrated Healthcare Association's California Regional Health Care Cost & Quality Atlas found that a capitation payment model is an example of a payment program that provides better value and outcomes and lowers costs. Cost savings associated with capitation for patients with chronic conditions are even better than for average patients, according to that study.
Humana announced Tuesday a nationwide bundled payment model for oncology for its Medicare Advantage and commercial members. Under the model the payer financially rewards providers for exceeding quality metrics over a one-year period.
The Affordable Care Act has also helped people with chronic illnesses. A 2018 study in Health Affairs found that a higher percentage of people with chronic conditions were in ACA plans than employer-based insurance and off-exchange nongroup plans in 2014 and 2015.