The Biggest Urban Legend in Health Economics–and How It Drives Up Our Spending

The wellness emphasis in the Affordable Care Act is built around the Centers for Disease Control and Prevention’s (CDC) 2009 call to action about chronic disease: The Power to Prevent, the Call to Control. On the summary page we learn some shocking statistics:

  • “Chronic diseases cause 7 in 10 deaths each year in the United States.”
  • “About 133 million Americans—nearly 1 in 2 adults—live with at least one chronic illness.”
  • “More than 75% of health care costs are due to chronic conditions.”

Shocking, that is, in how misleading or even false they are. Take the statement that “chronic diseases cause 7 in 10 deaths,” for example. We have to die of something. Would it be better to die of accidents? Suicides and homicides? Mercury poisoning? Infectious diseases? As compared to the alternatives, it is much easier to make the argument that the first statistic is a good thing rather than a bad thing.

The second statistic is a head-scratcher. Only 223 million Americans were old enough to drink in 2009, meaning that 60% of adults, not “nearly 1 in 2 adults,” live with at least one chronic illness—if their language is to be taken literally. Our suspicion is that their “133-million Americans” figure includes children, and the CDC meant to say “133-millon Americans, including nearly 1 in 2 adults, live with at least one chronic illness.” Sloppy wording is not uncommon at the CDC, as elsewhere they say almost 1 in 5 youth has a BMI  > the 95th percentile, which of course is mathematically impossible.

More importantly, the second statistic begs the question, how are they defining “chronic disease” so broadly that half of us have at least one? Are they counting back pain? Tooth decay? Dandruff? Ring around the collar? “The facts,” as the CDC calls them, are only slightly less fatuous. For instance, the CDC counts “stroke” as a chronic disease. While likely preceded by chronic disease (such as hypertension or diabetes) and/or followed by a chronic ailment in its aftermath (such as hemiplegia or cardiac arrhythmias), a stroke itself is not a chronic disease no matter what the CDC says. Indeed it is hard to imagine a more acute medical event.

They also count obesity, which was only designated as a chronic disease by the American Medical Association in June—and even then many people don’t accept that definition. Cancer also receives this designation, even though most diagnosed cancers are anything but chronic—most diagnosed cancers either go into remission or cause death.  “Chronic disease” implies a need for and response to ongoing therapy and vigilance. If cancer were a chronic disease, instead of sponsoring “races for the cure,” cancer advocacy groups would sponsor “races for the control and management.” And you never hear anybody say, “I have lung cancer but my doctor says we’re staying on top of it.”

That brings us to the last bullet point. Convention typically attributes more than 80% of healthcare costs to less than 20% of people, meaning that costly ailments are concentrated in a relatively small group. Instead of this, the CDC’s data attributes 75% of costs to about 50% of the adult population, implying almost the exact opposite: the cost of chronic disease is widely dispersed. Indeed, if you remove the rare diseases afflicting about 1% of the population but accounting for about 7-8% of cost, you come very close to parity between the proportion of the population with chronic disease and the proportion of total health spending attributable to chronic disease.


So what?

This urban legend, appearing verbatim more than a million times on Google, is among the single biggest causes of uncontrolled healthcare spending.

First, this statistic encourages employers and health plans to focus on the opposite of what they should focus on. Penn State, citing this 75% statistic in their August 22 media advisory meeting as justification for its controversial wellness program, provides a classic example of this wrongheaded focus, with unfortunate consequences for the university’ reputation and employee relations, with no offsetting balance sheet benefit.

Overdiagnosisovertreatment, and overprescribing are far more pressing issues in the commercially insured population than underdiagnosis, undertreatment and underprescribing in the name of “prevention.” Regardless, the single-minded emphasis by employers and their benefits consultants on getting more employees to view themselves as chronically ill, or about to become chronically ill, contributes to medical overuse issues rather than addressing them.

Fanning these flames isn’t just a bad idea on its own. It distracts employers from real issues such as provider pricing disparities, hospital safety, outliers (the small percentage of employees who really do account for half the cost—usually not due to a chronic ailment, though) and pharmacy benefit managers (PBMs), whose per-drug margins are about twice what they would be if anyone spent any time weed-whacking their obfuscations of rebates, implementation fees, etc. and simply negotiated the margin directly. This whole misdirection brings to mind Peter Drucker’s lament that last frontier of good management in the American economy is the health care system.

Second, the implication that there is a 75% pot-o’-gold to be saved through prevention turns out to be anything but. If you strip away the expenses of prevention and management itself (which represent a large proportion of that 75%), those aforementioned rare diseases, and unpredictable or uncontrollable exacerbations, you are left with about 7% of expenses fitting the category of events possibly preventable through wellness, even when wellness-sensitive medical event diagnostic code categories are defined broadly enough to include disease management-sensitive categories as well. Achieving a 15% reduction in those categories—a feat rarely accomplished, which is why vendors never disclose this figure—would reduce overall spending by 1%, or about $60 per person or about one-tenth of the incentives commonly paid to employees to play along in these schemes.


What to do next?

It seems like all our posts end the same way: Stop poking your employees with needles. We’ve analyzed wellness’s “science,” its math, its outcomes, its philosophy…and now its epidemiological premise. Even as all their hokum has been debunked, the wellness industry has steadfastly refused to defend itself on this site or any other, because although many of the vendors appear to be incapable of critical thinking, they are smart enough to realize that facts are their worst nightmare.

First posted on The Health Care Blog 8/24/2013.

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  1. While I agree with your general thrust, I do take issue with your cancer example. Cancer increasingly IS a chronic disease. The fact that it may go into remission doesn’t preclude the need for continuous monitoring, but requires it.

    And as for relying on what cancer advocacy groups promote to make your point, well – that’s as bad as relying on the wellness programs you’re discrediting. Races for “cures” are as successful, and disingenuous, as the war on drugs. And they’re every bit as willing and able to obfucscate their results as those same wellness programs.

    You’re quite correct, however, that employers would do far better to focus on inefficient and unethical medical delivery than marginal prevention programs with little near-term payback. Because they’re often co-opted by local delivery systems, however – serving on hospital boards and the like – they’re unlikely to bring a critical eye to this root cause of medical misspending and inflated employee benefit costs.