The Cost of Chronic Diseases

February 4, 2002

Chronic diseases have a huge impact on the health of American workers, and on the cost of health care in the United States. Planlinx prepared this look at four chronic conditions – asthma, depression, diabetes, and high blood pressure -- their prevalence, the costs of illnesses, and the toll they take on the productive lives of employees:

Asthma: Asthma is a very serious chronic disease affecting more than 17 million Americans. Pediatric asthma is the leading cause of chronic illness in children, with an estimated prevalence as high as 8 percent, and is the cause of an estimated 13 million physician visits and 200,000 inpatient hospitalizations each year. Asthma is common in adults as well, affecting 5 to 10 percent by some estimates. Overall, between 9 and 12 million Americans are presently diagnosed as having asthma.

The incidence of asthma appears to be increasing. Between 1988 and 1997, the overall hospital discharge rate increased by 6.7 percent. From 1982 to 1996, the overall prevalence of the disease increased by 58.6 percent, with the highest increase (123.4 percent) seen in working-aged adults 18 to 44.

Between 1979 and 1997, a period during which the death rate attributed to all causes decreased by 17 percent and 8 out of 10 of the leading causes of death experienced decreases, asthma mortality actually increased by 55.6 percent. This rise in the incidence and mortality of asthma has been particularly notable in inner cities, possibly related to worsening environmental conditions such as outdoor air pollution.

Spread throughout industries
Occupational exposure may be another contributing factor. As many as 250 substances have been noted to trigger occupational asthma, some of which have the capability of causing illness which persists for years and is sometimes irreversible. Fifteen to 20 percent of all cases of adult onset asthma are thought to be work related. Contrary to intuition, cases of occupational asthma are not confined to the industrial sector. In one study, 39 out of 55 affected individuals worked in professional or service occupations such as nurse, cook, librarian, custodian, secretary, or sales director.

The total cost of asthma in 1994 was estimated at $10.7 billion. Direct medical expenditures accounted for approximately $6.1 billion or 56.8 percent of that total. The remainder consisted of indirect expenses such as time lost from work. For employer-sponsored health plans, the direct medical costs related to asthma are substantial. One 1992 study, using the enrolled children in a staff model HMO plan in Washington state, found that children with asthma had 88 percent higher medical expenses, received 65 percent more ambulatory visits, and had twice as many inpatient days as non-asthmatic children.

Data from the 1987 National Medical Expenditure Survey indicated much higher ratios nationwide. Asthmatic children were found to have 2.8 times the total medical expense, 1.9 times the ambulatory visits and 3.5 times as many hospitalizations as non-asthmatic children. For the employer, the indirect costs of asthma are significant as well. In 1994, for persons with asthma age 18 and older, there were an estimated 8 million work days lost at a cost of $1.3 billion. Over the period 1985-1994, adjusted costs associated with caregiver absence from work rose by over 38 percent. The cost of absences for adult asthmatics rose by over 395 percent during the same period, with an 80 percent increase in the total days lost.

Traditional methods failing
Traditional medical management approaches taken by health plans have done little to stem the increasing costs associated with asthma, much less do anything to promote better outcomes for and improve the quality of life of participants suffering from asthma. Utilization review programs may have some modest impact on length-of-stay in hospitalized patients but generally do little or nothing proactively to prevent the next ER visit or hospitalization. Greater physician compliance with asthma practice guidelines such as those published by the National Heart, Lung and Blood Institute could greatly reduce the morbidity associated with asthma but utilization review programs generally do not promote such compliance.

In recent years, more and more health plans have turned to disease state management as an answer to the asthma problem. Disease management programs utilize multidisciplinary care management, consultation by asthma specialists, treatment protocols based upon nationally accepted standards of care, and patient and caregiver education in a strategy aimed at preventing acute exacerbations, thereby reducing inpatient and emergency room utilization by asthmatics. Health and economic outcomes data is used to measure the effectiveness of the disease stage management program. Outcomes research has indeed proven that disease state management and intervention programs can be very effective at reducing morbidity and resource consumption associated with asthma. One 1998 study estimated $4,845 per patient in annual resource savings after 22.8 months of follow-up.

The principal problem with disease management programs for asthma is their reliance upon claims data analysis for case finding. Lack of standard criteria for identifying asthmatics and the reluctance of providers to label patients as asthmatic because of concerns about patient insurability mean that asthma is under-reported in claims data. Use of claims data typically involves delays of 3 to 6 months before a patient can be identified and disease management can be implemented. This delay results in increased morbidity and much lost savings opportunity.

Depression: The Global Burden of Disease Study has identified major depression as the fourth leading cause of death and disability worldwide. Depression was ranked behind lower respiratory infections, diarrheal diseases, and perinatal disorders, but, surprisingly, ahead of ischemic heart disease and cerebrovascular disease, conditions that we are used to thinking of as our most significant health problems.

According to the National Institute of Mental Health, approximately 18.8 million Americans -- 9.5 percent of the U.S. population aged 18 and over -- have a depressive disorder at any given time. One in 6 will suffer from major depression at some point in their lives. And there is evidence from epidemiological studies that the incidence of depression is on the rise. 1990 estimates put the annual costs of depression in the United States at $43.7 billion. Major depression has a high mortality rate -- as much as 15 percent by some estimates -- and increases morbidity and mortality associated with other chronic diseases.

No care given
Despite the fact that effective treatments exist for depression, large numbers of cases go without any care. Others receive care that is sub-standard. A study newly published in the Archives of General Psychiatry finds that while 83 percent of adults with a probable depressive or anxiety see a healthcare provider and 30 percent receive some appropriate treatment, most of the care provided is from primary care providers only. Only 19 percent of those receiving treatment from non-specialists were found to receive appropriate care (compared with 90 percent of those receiving care from a mental health specialist). Insurance coverage and income had no effect on rate of appropriate treatment.

The widespread inadequacy of treatment for depression has tremendous implications for employers seeking to control healthcare costs and maximize productivity.

Untreated depression is responsible for overall increases in medical care costs for an employee population. Depression has been repeatedly been shown to increase usage of non-behavioral health services.

A 1995 study, for example, published in the American Journal of Psychiatry, measured health care costs for 328 primary care patients in an HMO who had been screened for anxiety and depressive disorders. Patients with anxiety or depressive disorders had 70 percent higher health care costs ($2,390 vs. $1,397) than those with no such disorders. Cost differences persisted after adjustment for medical co-morbidities and were found to be related to increased utilization of general health services and not higher mental health treatment costs. Successful treatment of depression may normalize healthcare costs over time.

Affect on non-mental health
Unavailability of adequate mental health services results in increased utilization of general health services. An example involves a large self-insured U.S. corporation that, in an effort to control rising health care costs, instituted greater employee cost-sharing through large increases in deductibles and co-payments. In addition, illness-specific prior-authorization and utilization review procedures were instituted.

These measures resulted in a greater than one-third decline in the utilization mental health services over two years, three times the decline experienced for other health services. However, those employees who used mental health services experienced a 37 percent increase in use of non-mental health services (as well as significantly increased lost days due to illness). Non-users of mental health services experienced no such increases. Cost savings associated with decreased utilization of mental health services were fully offset by increased general health care utilization and sick days.

Untreated depression is common among patients suffering from other chronic conditions. Cost of illness, severity of symptoms, and compliance with treatment regimen can all be negatively impacted by the co-morbidity of depression. A recent study on depression in diabetes found a direct relationship between severity of depression symptoms and poorer diet and medication adherence, greater functional impairment, and higher health costs in primary care diabetics.

Depression was found to increase mortality as well as increase outpatient hospital contacts and inpatient readmissions among 848 1-year survivors of acute myocardial infarction. In addition to increasing the severity of pre-existing chronic conditions, untreated depression may actually be a predisposing factor to the development of chronic disease.

Indirect costs, too
Apart from the direct health care costs associated with untreated depression, it is clear that there are substantial indirect costs, such as increased absences, decreased productivity, and increased disability. A study among employees at First Chicago Corporation demonstrated longer average length of disability and higher disability relapse rate for those employees disabled by depression as opposed to other conditions. Another study found depressed workers have between 1.5 and 3.2 more short-term disability days in a 30 day period than other workers. A 2000 study in the American Journal of Psychiatry found depressive illness to be associated with a mean 9.6 annual sick days in a major corporation, significantly more than heart disease, hypertension, diabetes, or back problems.

Treatment of depression has been found to normalize productivity and absences. Berndt and Finkelstein, in a 1998 study of perceived work performance in depressed individuals, found that a reduction in depressive severity was associated with improved performance, and that improvements occurred rapidly, two-thirds of improvement by week 4 of treatment. VonKorff and Ormel, writing in the Archives of General Psychiatry, report a 72 percent reduction in disability days and 40 percent reduction in disability score in treated severe depressives. Moderately depressed individuals achieved a 36 percent reduction in disability days and a 45 percent reduction in disability score.

Diabetes: For this example of a serious chronic illness and its costs, we will consider a health plan that has 10,000 covered lives. An estimated 500 to 1000 are Type I and Type II diabetics. They may account for as much as $1 in every $7 you spend on healthcare. One in 3 of your subscribers requiring dialysis and 1 in 4 of those requiring kidney transplant may be found in this group. They are at risk for blindness, amputations, stroke, diabetic neuropathy, chronic ulcers, gastroparesis and other complications.

Despite this, perhaps 65 percent of those individuals have never attended an educational program on diabetes and 40 percent may have received no diabetes education whatsoever. Most of them do not monitor their blood glucose daily. About 50 percent do not receive HbA1C testing. 65 percent receive no fasting blood glucose testing. More than 90 percent do not receive regular foot exams. More than a third may have never seen a dietician. 30 percent may not receive retinal exams or have their lipid levels checked. This is a population crying out for disease management intervention yet conventional wisdom tells you that disease management cannot be cost effective.

The Diabetes Control and Complications Trial (DCCT) was a multicenter study sponsored by the National Institutes of Health between 1983 and 1993.

Dramatic results
The study demonstrated that a comprehensive diabetes management program aimed at keeping blood sugar as close to normal as possible could result in decreased long-term complications in Type I diabetics. Participants were trained to test their blood sugar and administer insulin 4 or more times per day. Insulin dosages were adjusted in accordance with food intake and physical activity. A diet and exercise plan was followed and patients received regular follow-up from an interdisciplinary team of health professionals. Results of the trial were dramatic. Risk of retinal complications was reduced by 76 percent, kidney disease risk by 50 percent, and neuropathy risk by 60 percent.

Given these favorable results, one might expect that comprehensive diabetes management such as that provided in the DCCT would be embraced by managed care organizations as a surefire approach to improving quality of care and reducing costs associated with diabetes.

But the DCCT doubled the cost of management of participants. Although this cost increase is offset by reduced medical expenses related to long-term complications, managed care organizations have been reluctant to embrace disease management programs modeled on the DCCT.

Given that the average subscriber stays with a managed care organization only about 18 to 24 months, a savings model based upon reduced long-term complications is a hard sell in the current environment. For employers hard-pressed to reduce healthcare premiums, short-term increases in cost associated with comprehensive diabetes management can be hard to swallow as well.

High absence rates
Most savings models, however, fail to account for the indirect costs of diabetes to an employer. Diabetics average 13.8 days of absence from work per year versus 3.0 for the general population. For our example group having 10,000 covered lives, this means between 5,000 and 10,000 extra sick days per year (20 to 40 FTEs). Diabetics are much more likely to use short-term disability benefits than the workforce as a whole, and for diabetics, periods of short-term disability average 26 days. 12-month recidivism (the likelihood of having a second short disability period in 12 months) is about 8 percent. Diabetics are also more likely to have physical disabilities such as amputation or visual impairment that restrict the types of work that they can do and require special accommodation in the workplace.

A second limitation of many savings models is the failure to account for the increased general medical expense (expense not related to the treatment of acute glycemic effects or chronic complications) associated with diabetes. Middle-aged persons with diabetes have been found to be hospitalized more frequently than non-diabetic middle aged, with a longer mean length-of-stay.

In 1992, when total medical expenditures for persons with diabetes were estimated at $105 billion, only 16 percent was attributed to diabetes care and acute glycemic events. Diabetics have been found to have a rate a prevalence of depression about three times that of the general population as well as increased incidence of generalized anxiety disorder and simple phobia. Although not yet quantified, additional direct and indirect cost related to increased mental health services utilization and decreased productivity can be reasonably be expected for an employer.

Comprehensive diabetes management have not universally failed to demonstrate short-term cost savings. Diabetes Treatment Centers of America published short-term results from their comprehensive diabetes management program, Diabetes NetCare, in the Journal of Clinical Endocrinology in 1998.

With 7,000 diabetic lives, at 1 year after initiation, gross adjusted economic savings reached $50 per diabetic member per month, hospital admissions were reduced by 18 percent over baseline, and bed days were reduced by 21 percent. Participants were significantly more likely to have received HbA1c testing, foot examination, eye examination and cholesterol screening.

Program costs were not published but the program was reported to break even at approximately 1,265 diabetic members. The $600,000 in adjusted gross savings per 1,000 diabetic members achieved in year 1 was projected, by DTCA’s model, to grow to $828,000 in year 2, $1,120,000 in year 3, $1,364,000 in year 4, and $1,510,000 in year 5. Analysis included only medical costs. It did not consider likely substantial savings from increased productivity and decreased work absences.

High Blood Pressure (Hypertension): About 1 in 5 Americans and about 1 in 4 American adults have high blood pressure. Hypertension was listed as a primary or contributing cause of more than 10 percent of all deaths in the United States in 1997. As many as 423,000 hospitalizations during 1997 could be directly attributed to hypertension. Hypertension is a leading cause of heart failure, end-stage renal disease, and stroke.

Based upon studies by the National Heart, Lung, and Blood Institute (NHBLI), direct medical expenditures for hypertension in 1995 were estimated at $17.07 billion, with another $6.67 billion in costs related to lost wages and productivity. These conservative estimates only reflect the direct costs of hypertension -- not the staggering costs of its subsequent impacts.

Of those Americans with high blood pressure, according to the NHBLI study, 31.6 percent are unaware they have it. Another 26.2 percent are receiving medication but remain uncontrolled. 14.8 percent are receiving no medication. Using these statistics, it can be estimated that 18 percent of adult US health plan enrollees are presently at risk due to uncontrolled hypertension.

Large bills
Research findings presented at the American Heart Association’s 72nd Scientific Sessions during November 1999 indicate that a person with untreated severe high blood pressure will incur an average of $14,582 per year in medical bills due to hypertension and its complications.

A moderate hypertensive would incur an average of $5,646, and a mild hypertensive $3,678. The costs of effectively treated severe, moderate, and mild hypertensives averaged $895, $760, and $516 respectively. Using the weighted average cost for uncontrolled hypertensives ($5,492) and the maximum average cost for controlled hypertensives ($895), the average annual cost savings associated with effectively controlling hypertension can be estimated at $4,597 per individual.

Utilizing the figures above, it can be estimated that, for an employee group health plan with 15,000 covered adults, achieving control in just 10 percent of presently uncontrolled hypertensives can result in potential cost savings of over $1.2 million annually.

SOURCE: Planlinx. To read the fully footnoted versions of these stories, as well as another piece on heart disease, please visit Planlinx.