Apr 17 2012
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The Cost of Obesity and the ROI of Prevention

Michael O'Grady, NORC

A new report, Assessing the Economics of Obesity and Obesity Interventions, by researchers from the Campaign to End Obesity, looks at the costs of the obesity epidemic and the possible array of interventions that could prevent obesity and save the country money.

When the Congressional Budget Office measures the impact of policies to address chronic diseases, their estimates usually cover a 10-year period. The authors of this new report argue that this timeframe accounts for most of the costs of legislation, but tends to underestimate the benefits. Preventing chronic diseases can have benefits over a long period of time, because many costly complications from such diseases take more than ten years to develop. The authors recommend using a 25-year budget window instead to fully account for the value of disease prevention. The report was supported by the Robert Wood Johnson Foundation.

NewPublicHealth spoke with Michael O’Grady, PhD, a senior fellow at the National Opinion Research Center (NORC) at the University of Chicago, a lead author and a former Assistant Secretary in the Department of Health and Human Services, about the report.

NewPublicHealth: How did the report come about? What research have you been doing that led you to this?

Michael O’Grady: The desire here was to bring in outside researchers to lend a fresh set of eyes who can take a look at the evidence around obesity, and who would have insight into more of the policy discussions that have gone on. My background is on the Hill. So to a certain degree, my co-author and I, Jim Capretta, have expertise in terms of modeling, and in the research, but also very much in terms of how that fits into terms of policy decision-making.

NPH: And what is the gist of what your report found?

Michael O’Grady: There were three main things that we were asked to look at. We were asked to look at what was the most rigorous and best evidence on both the size of the obesity problem in the United States today, as well as the best projections of where it’s liable to go over the next decade or two. The second question was how much is obesity really costing us, and what are the spending projections over the next decade or two? Third, are there interventions that appeared to be either be cost-effective or provide cost savings in the areas of obesity prevention or treatment?

We looked across the broad range of obesity interventions, which include school-based interventions, community-based interventions, pharmaceutical interventions, surgical interventions and then workplace interventions. We tried to find a subset of those that had the right kind of analysis, the right data to be able to show fairly conclusively what they were able to do and how much money they were either able to save or at least how they were able to be cost-effective.

NPH: What is the role of targeting to make sure the right interventions get to the right people?

Michael O’Grady: This is done widely in other areas. When it comes to prevention and screening, for example, you ask questions like are you over age 50? Do you have a family history of this particular problem? Do you have a lab test that shows your cholesterol levels are over X or Y? So we do this in other areas. This is a little foreign to some areas like community-based interventions that say we’re going to have a walking program for our town and pretty much everybody’s invited.

The public health community tends to cast a much broader net. And that’s fine if you’re talking about low-cost interventions. If you’re talking about something where you’re going to spend $500 or $1,000 per year on whatever the program is, that’s not to say it’s not good, it’s not to say it doesn’t help a lot of people, but if you’re going to be careful about cost, you maybe can’t have quite as large a net. You maybe have to narrow this down the way other interventions do like transplants and screenings and other things like that.

NPH: Tell us about the current time window used to look at cost-effectiveness of interventions, and how that might be changed to better capture cost savings?

Michael O’Grady: There’s a budget process, which is important to keep in mind and to a certain extent that needs to be uniform. These numbers have to look at school lunch programs, aircraft carriers, NASA programs and so on in the same way. There’s an attempt to be fairly consistent so they see kind of the same metrics as they move from issue to issue.

Our traditional outlook in health has been very much who pays for it and who has to be paid? But all of a sudden as you see that the main drivers of both bad health and expenses are chronic disease-related. There’s a need to pivot and think of both the cost and the savings more along the lines of how epidemiologists look at it.

NPH: And epidemiologists look at results over a longer time period?

Michael O’Grady: The example I always use is diabetes. If a friend of yours comes to you and says, you know, I’m crushed, I got a diagnosis and I’m a Type 2 diabetic. You know that they won’t go blind or go on dialysis in the second year. That kind of outcome tends to be ten years out, twelve years out, fifteen years out, as the complications of the disease eventually accumulate and lead to horrible health outcomes that are also very expensive. If you only look at the first few years of a number of other chronic diseases, you’re seeing the cost of an intervention to try and prevent or to alleviate, but you never see the offset costs of having avoided dialysis in the twelfth year. You never see those savings if you only look at the first ten years.

NPH: What’s the messaging you would give to legislators to encourage using this longer timetable?

Michael O’Grady: The core mission here is to get legislators the best information to make the most informed decisions. What happens in the first five or ten years has very little to do with the real long-term cost of that program. You’re always weighing short term versus long term. But it does require that the policy-maker take the long view to make some of these things make sense.

NPH: What action has already happened as a result of your study and what action do you hope will happen?

Michael O’Grady: There are billions if not trillions of dollars on the line and you want them to be used based on information that is as accurate as possible. This [report] is very much the start of a discussion around showing the evidence. We all share a common goal of just making sure that the policy-makers really see the best data and the best projections in front of them. You really will serve that goal better with chronic conditions like obesity if you can take this longer-haul approach, which gives you a much more accurate picture of what a policy-maker is really voting on.

>>Bonus Reading: Check out a related RWJF issue brief on keeping obesity-related health costs under control.

Tags: Obesity, Obesity policy, Prevention, Public health system and finance, Q&A