Why isn’t Not Spending, Saving… THE CBO irony hurting the USA’s Fiscal Health
Proposal for Reducing Medicare etc Spending 7 Trillion Over the Decade
Why isn’t Not Spending, Saving… THE CBO irony hurting the USA’s Fiscal Health
Proposal for Reducing Medicare etc Spending 7 Trillion Over the Decade: Rethinking Fiscal Health: The Power of Wellness as a Fiscal Strategy
Exec Summary: The Congressional Budget Office (CBO) currently does not classify reductions in Medicare spending as savings, or any reduction in spending for those over age 65 as savings, which limits the potential for cost reduction in entitlement programs. However, the Cleveland Clinic's experience demonstrates that significant savings (38% without major benefit changes) are achievable through proactive health initiatives.
In the realm of economics, the notion of saving by not spending seems intuitive. Yet, according to the Congressional Budget Office (CBO), this logic doesn't fully translate into fiscal policy. The time has come to reevaluate how we account for savings, particularly in the context of healthcare spending. A pioneering approach by the Cleveland Clinic offers a blueprint for not only reducing spending but also enhancing the well-being and financial security of our aging population.
#### The Fiscal Dilemma
Everyone admits, even the Bond Vigilantes, that The United States faces mounting deficits, with many pointing to the ballooning costs of entitlement programs such as Social Security and Medicare as culprits. While the structure and changes in Social Security payments is relatively fixed, Medicare's costs have surged, outpacing inflation despite efforts to contain them. This raises a pressing question: Can we change this trajectory? The answer lies in a transformative model of preventive healthcare.
#### The Cleveland Clinic Experiment
In 2008, the Cleveland Clinic embarked on a bold experiment to improve employee health while curbing medical costs. As the founding Chief Wellness Officer of the clinic, I witnessed firsthand how incentivizing health could yield substantial financial and wellness dividends. By encouraging employees to maintain six key health metrics—a program we termed "6 + 2" normals—and offering large financial incentives for defined outcomes in biomarkers for disease, the clinic not only improved health outcomes but also realized significant cost savings.
Over 12 years, the Cleveland Clinic avoided spending $1.5 billion, compared to similar institutions with similar employee and dependents mixes. Employees saved another $300 million in premiums, more in Co-Pays, productivity increased, and absenteeism decreased by 33%. Remarkably, the percentage of employees voluntary joining exceeds 75%, and even more impressively those employees meeting the program's health criteria rose from 6% to 43.6% and sustained in a healthful range for more than a decade. This initiative proves that investing in motivating wellness pays dividends far beyond the individual, extending to organizational and maybe it can to national levels as well.
#### A National Imperative
If the Cleveland Clinic's model were implemented nationwide, (and remember the clinic has porters, and environmental working positions that span the gamut to nurse and doctor), the potential savings are staggering. Estimates suggest that achieving similar health outcomes for all U.S. workers and Medicare enrollees could save the country over $0.7 trillion annually, or almost 7 trillion over a decade. Extending this to a broader demographic could double these savings. This is not merely an exercise in fiscal prudence but a moral imperative to enhance the quality of life for millions.
#### The CBO Conundrum
Despite the clear benefits, efforts to replicate this model have been stymied by the CBO's accountings as presented to Congress. The office does not (they have said) recognize reduced spending in Medicare or to anyone over age 65 as "savings," a stance that has hindered legislative efforts like the bipartisan (Portman/Wyden—two smart dudes IMHO) "Rewards for Better Health" 2013 bill. –that is reduced spending is just not spending, not a savings for tax or budget calculations. IMHO it is imperative that we advocate for a revised accounting framework that reflects the true value of not spending that is incentivized by preventive health measures.
#### A Call to Action
The path forward is clear: incentivize biomarker outcome variables that forecast preventing chronic diseases in all groups, from Medicare enrollees to federal employees. By aligning financial incentives with health outcomes, we can not only stabilize healthcare costs but also significantly reduce the national deficit without resorting to tax increases. Let’s make sure the CBO counts not spending as saving. This approach represents a paradigm shift in how we view fiscal responsibility and public health.
The Cleveland Clinic experiment and model is more than a success story; it is a roadmap and challenge for motivating success with MAHA. By prioritizing incentivizing wellness, we can achieve fiscal sustainability and improve the well-being of our citizens.
Thanks for reading, Michael F. Roizen, MD