Notes on Annual Savings by Stakeholder Group

Preliminary draft estimates. Mutual matching investments result in mutual savings.

CMS = Centers for Medicare & Medicaid Services (regulates Medicaid at the federal level—together with AHCCCS in Arizona and other state agencies in other states; CMS operates within the US Department of Health & Human Services).

Immediate Savings column: lower-range (left-side-of-dash) estimate based on child/student direct medical costs, & upper-range/right estimate based on parent medical costs;  except that Businesses/Families/Economy row based on indirect chronic/productivity costs.  Other ROI analysis: see other slides.  Children & their parents already have high chronic condition prevalence, so there is major rapid savings potential.

Upper-end Immediate Savings from school-based strategies are from both K-12 students’ (per UArizona/SUSD outcomes—see Reeves, 2016 & other slides) & parents’ healthier behavior & related cost savings (with parent savings est. 15% of Young Adult savings: Immediate Young Adult savings based on est. of ~50% of Young Adults being parents (Pew Research, 2018), & that parents will be substantially more likely than non-parents to change their behavior & improve their health immediately, as a result of K-12 programs with their children—est. 1/3 parents improve health).

Total AZ chronic costs in 2016 were at least $24B, of which ~1/2 from inactivity & unhealthy nutrition (obesity/“metabolic syndrome”) (Milken Institute, 2018).  Approx. 20% of that could be prevented via K-12 settings, including by postponing the onset & reducing the severity.  Build up from $50M to $500M/year investment for full savings, with each stakeholder group contributing ~$15M+/group/year—growing based on results to $150M+/yr (more from CMS eventually since CMS receives even more savings federally).

Matching ratios between stakeholder-funder/investor groups TBD—rough rule of thumb might be 1/3 state/AHCCCS, 1/3+ CMS/federal, 1/3 private health insurer/major self-insured employer/employee.  Co-/Matching investing also sustains campaign, by spreading the costs, while strengthening the incentive for each group to continue investing due to co-matching multiplier effect.

There is some overlap/double-counting in savings here, with savings allocation between categories (esp. State/AHCCCS & Medicaid/CMS) and between insurers/employers/employees TBD/negotiated.

*Assumes Medicaid/CMS allows state waiver to keep/re-invest child/K-12 savings, in return for state appropriations & achieving health outcomes & savings.  CMS eventually invests more because it saves more, e.g., from ACA Medicaid expansion & marketplace subsidies.

**Estimated that Businesses/Families/Economy (B/F/E) will save 10-20+% in greater productivity: less absenteeism, presenteeism;  higher wages, sales, profits;  higher GDP, tax revenues; B/F/E Immediate Savings roughly estimated based on reduced parent absenteeism & presenteeism due to less child chronic & other health issues + improvement in parent health (see other slides).

​+: Plus sign reflects major additional future savings when factoring in future population & prevalence growth including in young adulthood.  Requires permanent annual K-12 co-investments by state, fed. & private health & other sectors, with regular outcomes metrics & evaluations to maintain trust/support & sustain savings.  Key underlying estimates/projections, based on current preventable chronic rates/costs/evidence-based program-effectiveness.

K-12/Young-Adult/Middle-age Adult (Nonelderly Adult), respectively: 

  • Current Chronic Prevalence 12%/25%/50%; Extra Annual Costs Above-Normal-without-Chronic-Conditions due to Chronic Disease: $1K/$5K/$7K respectively;
  • Reduction in Preventable Chronic Disease: -50%/-33%/-20%;  (est. by HFUS: evidence-based on reducing prevalence & severity & delaying on-set).

Example of how health care savings add up, by postponing diabetes or heart disease etc. onset in adulthood for 1 child:  If delay onset by 5 years: save $25,000; if delay by 10 years: save $50,000;  if delay until elderly/ Medi-care: save up to $250,000 —multiply this by 100,000+ students for potential savings.  Even in privately-insured population there are high levels of inactivity & unhealthy nutrition etc. & significant risks of chronic disease, as evidenced by middle- & upper-income teen prediabetes rates.

It is much easier to keep kids active & give them healthy nutrition in a controlled “captive audience” school environment for 13 years, than to change adult behavior.

Even if this only postpones the onset of chronic conditions for 5-10 years, enormous savings result & the investment is fully paid back.  In addition, healthy habits developed K-12 lay ground-work for follow-through policies in adulthood, providing a viable opportunity to extend habits & savings much later in life.  We achieve this by sustainably funding adequate amounts of quality, effective, accountable, evidence-based physical, nutrition, mental/character & other health ed & school-based prevention K-12.

(See latest notes in most recent HFUS slides.)