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Trends, Costs in Healthcare

Life Style Related Cost in Healthcare

Milken stated that if the average American lost 15 pounds that the there would a savings in healthcare costs of over $1T.   A dramatic thing to say, and there is some truth to this statement.  In the WSJ article on Obesity, it is clear that the current consensus is that the costs of being overweight is growing more serious.  In fact the Milken Institute says that life style is related to chronic illness driving $1.2T a year in healthcare costs.

With 3 out of 10 obese, 72 million are therefore suffering or going to suffer from the related ailments.  Nearly 10% of the cost of healthcare is directly caused by obesity.  Life style related is even higher, being attributed to a sizeable percentage of the total costs.  Diabetes alone consumes 34% of the total Medicare costs. and for Medicaid, 47%.

Obesity is a factor in the total cost of healthcare.  In the WSJ article it was disclosed that 10% of the total cost of healthcare is due to obesity, and this is for directly related ailments.  I imagine the total cost including indirect or highly affected costs is actually a good deal more.   Healthcare economists have been saying that obesity is a major driver of healthcare cost increases over the years. "About a third of adult Americans are obese, and the obesity rate rose 37% between 1998 and 2006, the years covered by Monday's study."

Healthways, a company promoting and supporting well-being, goes further in determining the cost of life style.   Overall conclusion of this study is that there would be 40 million fewer cases of chronic illness with improved life style.  This would result in $1.1T savings annually by 2023 if the program began in earnest now.  Since chronic illness accounts for 70+% of all healthcare costs this is significant. 

Furthermore, they determined that the Present Value of Medicare costs on average to each recipient was $174K over the life span of that person.  With the current 37.5Million Medicare patients over 65 (some are disabled folks), this adds up to $6.5T dollars total.  If you break the population of Medicare folks up into high risk, medium risk, and low risk, a comparison of the different total costs for each can be done.  Just increasing the percentage of low risk to the range of 54 to 75% would save $142B annually, or $1.43T over 10 years. 

In other words, if more folks as they approach Medicare age, would improve their life style, the savings would be tremendous.   Having individuals take more responsibility for their health, and see incentives that support that idea, has to be  part of any reform.