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Ten-year Medicare budget impact of increased coverage for anti-obesity intervention

02 October 2019 Frank Chen

Obesity rates have reached 37.5% and 39.4% among men and women age 60 and older by 2014, respectively, compared to less than 35% from year 2000 and earlier. Lifestyle interventions that promote physical activity and healthy diet, as well as anti-obesity medications, have proven effective in weight management. However, Medicare coverage on lifestyle intervention is widely underutilized and excludes access to anti-obesity pharmacotherapy. Expanding Medicare coverage to both interventions can potentially improve the overall health of beneficiaries with obesity, which in turn could lead to long-term reductions in health care spending.

In 2015, the Congressional Budget Office discussed potential budgetary implications of policies targeting obesity, and highlighted the paucity of studies assessing policy implications of clinical outcomes and overall health care spending for Medicare beneficiaries, asking: How many beneficiaries would participate in treatment for obesity? What share of participants would complete the full course of treatment? What would be the direct costs of treatment? How much weight would participants lose, and how long would that weight loss be maintained? How would weight loss affect the health care spending of participants and the federal budget?

We recently published a budget analysis study in Journal of Medical Economics to help address these questions and fill the research gap of the financial effects of proposed anti-obesity coverage policies. By modeling population characteristics, cost and effectiveness of anti-obesity interventions, and the sustainability of weight loss in real-life, it was estimated under increased coverage utilization assumptions, Medicare spends $1,798 to $1,886 more to cover the cost of intervention over 10 years for each treated beneficiary, but saves $8,640 to $9,041 in health care expenditure as the result of reduced risk of obesity-related diseases. Most of the projected cost savings come from lower utilization of ambulatory services and prescription drugs.

Overall, our study suggested the long-term saving on gross Medicare outlays due to improved weight management of eligible beneficiaries is likely to exceed the cost of their anti-obesity interventions, leading to a projected net budget saving of up to $23 billion over 10 years.

Acknowledgements: Funding for this study was provided by Novo Nordisk Inc.

Posted 02 October 2019 by Frank Chen, Principal Consultant

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