Health (Photo credit: Tax Credits)
Every day, 20 people with asthma go to an emergency room in Fresno, California, and more than three are hospitalized. About 17 percent of the city’s residents suffer from asthma, a rate more than twice the national average, largely as a result of the city’s rampant air pollution, slum housing and extreme poverty. With a population of about 500,000, Fresno is the second most impoverished, and the second most polluted, city in the U.S.
It costs an average of $19,000 for each person hospitalized in Fresno and the tab for the almost 1,300 people hospitalized each year is $24.6 million. Add in the cost of the 7,000 emergency room visits and the annual cost to the public of treating asthma in Fresno tops $35 million, according to data from the state of California.
Now think about this on a national basis. In 2009, about 25 million people in the US had asthma and, in 2007, the annual cost of treating them topped $50 billion, according to the Centers for Disease Control and Prevention. While asthma is a chronic disease with genetic roots, the triggers are environmental and can be substantially prevented. Yet the prevalence of the disease has been rising among people of all races, ages and sexes for decades. It is most common among children—especially low-income kids that live in slum housing in Fresno, Detroit, Washington DC or just about any urban area.
Study after study, pilot project after pilot project has found that interventions that clean up mold, roaches and other asthma-triggering contaminants can greatly reduce the suffering of people with the disease and lower the cost of treating them. If we could go one step further and reduce air pollution in affected communities by cutting emissions from cars, trucks and dirty industries, the impact would be even greater. By the same token, we know that helping people eat right and get physical activity helps reduce diabetes, heart disease and other kinds of chronic illness.
The problem is there’s no source of funds to pay for these kinds of interventions on a sustained basis. Pilot programs come to an end; foundation grants expire. Health systems and insurers haven’t historically paid for wellness efforts that make it easier for people to hike or bike or that bring healthy food to communities that lack it. The good news is that with help from Obamacare and new efforts to reform health systems, that’s starting to change. A little bit.
My organization, Prevention Institute, looked around to see if new financing methods are emerging that can help pay for measures that promote health and prevent illness and injury. We asked this basic question: How can we start paying for things that make people healthier, instead of just treating them when they get sick?
In a research brief, How Can We Pay for a Healthy Population? Innovative New Ways to Redirect Funds to Community Prevention, we identify four new models that hold promise for beginning to do this. One, which I’ve written about before, takes the idea of “social impact bonds” and applies it, for the first time, to health. With support from the California Endowment, an investment firm and a community-based clinic will raise and invest money to get rid of mold, roaches and otherwise mitigate the asthma triggers in the homes of 200 people who have been identified as heavy users of asthma services. If the effort reduces healthcare spending for these people, part of the savings will go back to the investors.
Another approach is to create a wellness trust—a funding pool set up by levying small taxes on health insurers and hospitals and using the proceeds to support evidence-based community prevention efforts. Massachusetts recently set up a $60 million Prevention and Wellness Trust, the first prevention fund ever set up by a state, and will start distributing the funds this summer.
All the new approaches find money that’s already in the healthcare system and redistribute it in a way that has the potential to make people healthier, and, over time, to save money. Isn’t it about time we started spending our money smarter?
