Can Reform's Prevention Incentives Help to Bend the Cost Curve?

Abstract

On my various trips to Boston for conferences and meetings, I make a point of having dinner with a close cousin. Our conversations invariably turn to the issue of health care and its reform. While hardly an advocate of comprehensive health reform, my cousin has taken the position that reform would be unnecessary if people took care of themselves. More specifically, he sees much of our current health care spending crisis as emanating from our sedentary lifestyles, poor health habits, lack of discipline regarding exercise and food consumption, and failure to follow recommendations for annual physical exams and other periodic preventive care. body is like a car, I recall him saying. You need to maintain it and every once in a while you have to look under the hood. My cousin does have a point regarding our reluctance to comply with good health practices and recommended preventive care, and I suspect that many others feel the same. Indeed, there can be ample personal rewards for such behavior as well as rewards to society at large. In the context of health reform, promoting preventive care and health-enhancing behaviors are part of the arsenal of cost-containment strategies in the Patient Protection and Affordable Care Act (PPACA), and a recent study sees the use of recommended preventive services as having the potential to reduce loss of life and achieve cost savings (Maciosek et al. 2010). However, in light of the fanfare and push for preventive care and other health-related practices, a critical issue is whether we can expect individuals to respond to reform's incentives for preventive activities, whether the vagaries of human behavior will impede such responses, and most importantly, whether such care can indeed be expected to reliably yield cost savings. In what follows, I explore the issue of whether we should expect incentives for more preventive care to yield substantive savings, and thus to what extent we can expect prevention and good health behaviors to make a meaningful contribution to bending the cost curve. The PPACA and Incentives for Prevention The PPACA includes a variety of provisions directed toward the use of preventive health services and wellness activities. number of these measures entail administration and information gathering: creating administrative bodies to coordinate federal prevention efforts, establishing a national prevention strategy, expanding funds for public health programs, developing evidence-based recommendations for using clinical and community preventive services, and devising outreach campaigns for preventive benefits, among others (this and the following summary are drawn from the Kaiser Family Foundation 2010). The law also includes provisions to eliminate out-of-pocket costs for 41 preventive services rated A or by the U.S. Preventive Services Task Force (2010). It does so by eliminating cost sharing for such services covered by Medicare, and by increasing federal medical assistance to states (by one percentage point) that offer and B preventive services under Medicaid and also remove cost sharing. Additionally, the law authorizes Medicare coverage for personalized prevention plan services, provides incentives for Medicare and Medicaid beneficiaries to enroll in and complete behavior modification programs, and requires Medicaid to cover tobacco cessation programs for pregnant women. Finally, consistent with cost-containment goals, the PPACA permits the Secretary of the Department of Health and Human Services (DHHS) to modify or eliminate Medicare coverage of preventive services as recommended by the task force. Reform also eliminates out-of-pocket costs for and B preventive services for enrollees in qualified private health plans (beginning in September), and such plans are also required to provide, with no out-of-pocket costs, recommended immunizations, preventive care for children and adolescents, and additional preventive care and screening for women. …