Potential Medicare Savings through Prevention and Risk Reduction

Author(s): Elizabeth Y. Rula, PhD; James E. Pope, MD; and Joel C. Hoffman, ASA, MAAA, FCA

Potential Medicare Savings through Prevention and Risk ReductionIn the present study, we determined the specific health care cost savings to Medicare that would result from shifting the Medicare population toward improved health status by reducing risk factors associated with chronic disease. Using standard actuarial modeling, we calculated the present dollar value of the Medicare program for a typical beneficiary enrolled in fee-for-service (FFS) Medicare from the beginning of eligibility at age 65 until death. Using the model, we derived specific savings estimates that are based on various risk-reduction scenarios. The model provides important insights on the long-term impact of interventions aimed at reducing health risk levels on the net present value of the Medicare benefit over a lifetime.

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Topics: Older Populations Performance/Productivity Health Plan & Health System Medical Costs & Utilization Predictive Modeling