If an ounce of prevention is worth a pound of cure, how does that translate to dollars and cents?
According to a new study funded by the California Endowment, dollars spent on prevention make good health care sense in California.
Based on a national study earlier this year, a report released in late October zeroes in on California and suggests that an investment of $10 per person per year in community-based disease prevention programs could save California’s health care system more than $1.7 billion within five years.
Spending $10 per person on efforts to increase physical activity, improve nutrition, and prevent smoking and other tobacco use would make for healthier Californians who need less care down the road, the study suggests. The report highlights weight reduction efforts to reduce diabetes risk and nutrition programs to improve cardiac health and cholesterol levels.
“It’s a classic pay-me-now or pay-me-later situation,” said Rich Hamburg, government relations director at Trust for America’s Health, one of three organizations involved in researching and writing the report.Â “And clearly, paying now is better, not just financially, but for people’s health. Investing in prevention is definitely a win-win proposition.”
Return on Investment
Formally titled “Prevention for a Healthier California: Investments in Disease Prevention Yield Significant Savings, Stronger Communities,” the report was released in late October by Trust for America’s Health, the Prevention Institute and the Urban Institute. Also known as the California ROI (Return on Investment) report, the study concludes that California’s savings would represent a return of $4.80 for every dollar spent on disease prevention after five years.
Over a 10-to-20 year span, savings could grow to $1.9 billion annually for the state, which would be a return of $5.40 for every $1 invested.
Authors of the study estimate savings would break down this way:Â
- State and federal government each could save more than $84 million in Medi-Cal costs;
- Private payers in the state could save more than $1 billion; and
- Federal savings in Medicare would be more than $468 million.
Although saving money is a big factor and one of the report’s main objectives, it is not the only or even the most important point, according to Robert Phillips, senior program officer at the California Endowment and one of the report’s authors.
“Prevention is not just about cost effectiveness — it’s also about clinical effectiveness,” Phillips said.
“When it comes to rating prescription drugs, you look at two tracks — not just the drug’s cost effectiveness but its effectiveness in treating the patient as well. You have to look at prevention in the same way. Not only does it save money, but it makes people healthier. That’s a very important thing to remember,” Phillips said.
Phillips and Hamburg said the California report is something of a first.
“This model, breaking down the financial savings for a particular state from the prevention perspective is kind of the first of its kind,” Phillips said.
“We believe this is the first time a prevention study like this has moved from a national basis to a specific state,” Hamburg said. “It made sense to do it with California. There’s so much going on, and the state has such a leadership role in health care.”
Researchers examined “dozens and dozens of interventions and programs throughout the state,” Hamburg said. “There are a number of tremendous programs under way that we highlight in this report,” he added.
The California report is based on a national report released in the summerÂ — “Prevention for a Healthier America: Investments in Disease Prevention Yield Significant Savings, Stronger Communities” — commissioned by the Robert Wood Johnson Foundation and the California Endowment.
Hard Times “Might Be Right Time”
Arriving at a time when state and federal governments are struggling with increasing deficits and decreasing revenue, the report’s “Spend-now-to-save-later” message could be greeted with open arms or closed checkbooks.
“This kind of data may actually be better received because of the financial meltdown,” Hamburg said. “When you look at national health care costs of $2 trillion a year and begin to factor in the potential savings, prevention programs start to look very appealing.”
Phillips from the California Endowment hopes the reports — national and state — will elevate prevention programs to the top tier of health care planning.
“There are basically two schools of thought when you talk about prevention,” Phillips said. “There are those who endorse the idea and try to include it as an add-on when there’s extra time or money. And there are those who don’t pay it very much attention at all.”
“We’re trying to create the model that prevention is more than an add-on,” Phillips said. “What we’re trying to do is change the mind — even of the advocates of prevention who thought it was a good idea when there was extra money.”
“It’s a good idea, period,” Phillips said. “And we hope reports like this begin to make that point.”