Aging in America

Not long ago, living to be 100 years old was a rare event worthy of an article in the national news. In 1950, there were only 2,300 centenarians. Today, more than 53,000 people are 100 or older, according to the 2010 Census.

And that longevity is already beginning to tax the healthcare system as baby boomers roll into retirement. By the time the last baby boomer turns 65 in 2030, one of every five Americans will be a senior citizen, accounting for 20% of the population.

Blondin“The costs to healthcare are not just that people are living longer, it’s that we are living longer with chronic diseases that need to be managed,” says Lisa Blondin, MD, senior medical director at AmeriHealth New Jersey.

Over the next 25 years, the number of aging Americans-those 65 or older-will double to 72 million, according to a report by the Centers for Disease Control and Prevention (CDC). By 2050, nearly 89 million people will be 65 or older with nearly all of them enrolling in Medicare and Medicare Advantage.

Seniors tend to have higher healthcare costs than the population as a whole, says Brian Cook, a spokesperson for the Centers for Medicare and Medicaid Services (CMS).

Even though Medicare spending growth has been modest-just 0.4% per capita in 2012, and 3.6% in 2011-aggregate spending will increase over time. Total Medicare benefit payments were $536 billion in 2012, and spending is projected to nearly double from $592 billion in 2013 to $1.1 trillion in 2023, attributed to growth in the senior population and increases in care costs, according to the Congressional Budget Office.

Seniors who live longer also tend to live with more ongoing health concerns. According to the Kaiser Family Foundation, 40% of Medicare enrollees have three or more chronic conditions. In 2008, CMS reported that two-thirds of all Medicare beneficiaries had at least two or more chronic conditions. Likewise, a separate report by the American Hospital Assn., indicates four out of five seniors are affected by a chronic condition.

Baby boomers

The 79 million baby boomers born in the United States between 1946 and 1964 have had a profound effect on the economy of this country since day one. Of course, one area that is most likely to be impacted by this historically large population will be the delivery of healthcare.

“As they retire, they will add to costs,” says David Cutler, PhD, professor of economics at Harvard University. “Older people do spend more than younger people, and they will particularly add to public sector costs because they move onto Medicare and sometimes, Medicaid.” 

In the 1800s, the leading killers were infectious diseases, and they were likely to take people long before they reached age 65. By the 1900s, the leading killer was heart disease and cancer, which tended to be acute conditions. Today chronic conditions are emerging as critical factors throughout the whole cycle of life, driving higher utilization.

Krakauer “Aging is going to be associated with more chronic illness, and chronic illness will be associated with higher cost,” says Randy Krakauer, MD, national medical director for Aetna Medicare. “But there are things we can do to ameliorate this. We can manage risk factors better. We can manage chronic illness better. We can manage advanced [terminal] illness better.

“So, there are opportunities for favorable impact on both quality and quantity that will influence cost,” he continues. “We can decrease your costs in the next five or more years, but in adding years to your life, we may possibly increase your lifetime costs.”

Most people recognize that the current payment system is unsustainable and especially so for an aging population. There are many models from accountable care organizations to patient-centered medical homes that are designed to improve the way healthcare is delivered and expensed.

Overall Solutions

There are a few areas where the healthcare system could do a much better job controlling costs today, while delivering quality care, according to these experts:

• Preventive and wellness care;

• Managing chronic conditions;

• Reducing unnecessary procedures and tests;

• Controlling administrative costs; and

• Managing advanced or terminal illness.

Because chronic diseases are most associated with death and decline in the elderly, and many can be prevented or delayed, it makes sense to provide better case management for these conditions, according to Dr. Krakauer.

For example, each year, one in three older adults fall, which is a leading cause of hip fractures, as well as death due to injury in this country, according to the CDC. It is especially common among elderly women.

Dr. Krakauer says 25% of the falls are fatal. But they are also preventable.

“If we work on fall prevention, we can reduce the incidences of falls and fractures,” he says. “But the real problem is not the fall. The real problem is the osteoporosis that caused the bone to break from trauma that should not have happened. If we can identify that population that is at risk and increase bone mineral density in that population, if a patient falls, she may not have a hip fracture.”

And in certain populations, such as women with premenopausal hysterectomies, prevention can start even sooner, long before they become seniors, but society would not see the outcomes impact for 20 to 25 years.

Prevention and wellness has always been a hard sell. It is difficult to judge the savings of something that doesn’t happen, especially when the benefits won’t be seen for 20 years.

But that is changing, Dr. Krakauer says. And most health plans today emphasize wellness and preventive care because they recognize the overall value in serving a healthier population.

Unnecessary spending

Overuse is a key driver of cost, according to Cutler.

“We need to keep in mind that most of the medical spending over time is not people that are aging,” Cutler says. “What has been the significant driver of cost is that the stuff we do for any one person is more technologically advanced and more expensive than it used to be.”

For example, for a heart attack, it used to be that patients were prescribed bed rest and medications. Now, they have a more costly, invasive procedure to get a stent, he says.

“For many people, stents are incredibly valuable. They can mean the difference between life and death or high or low quality of life. But they are vastly overused,” he says.

Cutler says clinical trials show stents are not always effective, and there is variation in their rate of use in different parts of the country with no appreciable health benefits.

“They are used well by some doctors and poorly by others,” he says. “We will not decrease healthcare costs by saying ‘no to all stents,’ but we could save enormous amounts by setting up a system that uses this technology when it is appropriate and not using it when it is not appropriate.”

Appropriate care is an ongoing challenge for all payers. Aetna is trying to reduce avoidable and unnecessary use in its Medicare Advantage population by providing better case management for seniors.

“We run considerably below ‘unmanaged’ Medicare in terms of acute utilization,” Dr. Krakauer says. “I am not talking about denials. I am talking about things that don’t happen.”

For the senior population, coordinated care and case management can also improve the quality of the person’s final days, increase patient and family satisfaction, and reduce costs. Most patients with advanced illnesses have certain preferences for their end-of-life care, even though they might not put them in writing.

“We run a hospice-election rate of more than 82% for those that we engage in advanced illness case management, which we call Compassionate Care,” Dr. Krakauer says. “This has been associated with more than an 80% reduction in acute utilization and 86% reduction in intensive care utilization with a high level of satisfaction. When you reach out to people with advanced illness, and you offer that type of assistance, you get good results, and you improve the quality and costs demonstratively.”

As healthcare reforms move forward, the role of the primary care physician will become even more important, according to Dr. Blondin. AmeriHealth is working with CMS on the Comprehensive Care Initiative. The program pays physicians to coordinate care and work with patients to improve health outcomes and ensure access.

“We must renew our focus on primary care,” says Dr. Blondin. “Primary care physicians must take more responsibility for the care of their patients, and not just hand out a referral to a specialist.”

But new models of care will only work if the public perception is that the healthcare system is providing the right care and the best quality care, as opposed to denying care, Cutler says.

“In the heyday of managed care, all the empirical studies found that managed care cut costs and did not adversely affect patients,” he says. “It saved them money, but people hated it because they perceived the ethics of the system was to deny you care. That will not work. The biggest challenge will be making sure you provide the right care for the right person.”

Cook says that the Patient Protection and Affordable Care Act has already started controlling costs.

“All the steps that we’ve taken so far to lower costs appear to be working,” Cook says. “From 2010 to 2012, Medicare spending per beneficiary grew at 1.7% annually-more slowly than the average rate of growth in the Consumer Price Index, and substantially more slowly that the per capita rate of growth in the economy. Thanks in part to the reforms implemented in the Affordable Care Act, spending is projected to continue to grow slower than the overall economy for the next several years.”

In fiscal year 2012 the patients’ share of total Medicare spending was around 13.5%, according to Cook. But it won’t just be the government changing healthcare delivery. All of the experts say that the private market and patients themselves will play a role.

 “Traditionally, everyone looked to the government to take the lead,” Dr. Blondin says.

What Medicare did, private payers often followed. But Dr. Blondin says the government is moving too slowly today. Providers need to change the way they practice, and health plans need to change the way they function and reimburse for services.

“In addition, the average patient or consumer or member-the average American-has to understand that [changes] impact them dramatically,” she says. “They have a stake in this, too, and they need to work with their doctors to be more educated about these issues.”