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Annual Economic Impact of Chronic Disease on New Jersey Economy Is $39 Billion
Date:7/29/2008

New Jersey Health Care Quality Institute Announces Results of Milken

Institute Study

Future Costs Can Be Avoided with Proper Treatment and Prevention

Initiatives

NEW BRUNSWICK, N.J., July 29 /PRNewswire/ -- In a groundbreaking study released by the Milken Institute, the annual economic impact on New Jersey's economy of the most common chronic diseases is calculated to be $39 billion. In the U.S. as a whole, the cost is a staggering $1 trillion, which could balloon to nearly $6 trillion by the middle of the century.

Yet the news is not entirely grim because much of the future cost is avoidable.

"An Unhealthy America: The Economic Burden of Chronic Disease" brings to light for the first time what is often overlooked in the discussion of the impact of chronic disease-the economic loss associated with preventable illness and the cost to the nation's Gross Domestic Product (GDP) and American businesses in lost growth.

The results of the study were released at a press briefing sponsored by the New Jersey Health Care Quality Institute at the Heldrich Hotel in New Brunswick.

"This is a healthcare no-brainer," said David L. Knowlton, President & CEO of the New Jersey Health Care Quality Institute. "We can continue to ignore the consequences of not properly investing in treatment and prevention alternatives or we can make those investments and reap billions in savings."

"The data presented by the Milken Institute today highlights the true cost burden of our failure to address chronic disease," added Professor Carl Van Horn, Ph.D., director of the Heldrich Center. "We must reduce the rate of chronic disease to avoid potentially devastating economic damage to our state and nation."

According to the study, seven chronic diseases-cancer, diabetes, hypertension, stroke, heart disease, pulmonary conditions and mental illness- have a total impact on New Jersey's economy of nearly $39 billion annually. Of this amount, $31.5 billion represents the cost of lost productivity. The national numbers are $1.3 trillion and $1.1 trillion, respectively.

"By investing in good health, we can add billions of dollars in economic growth in the coming decades," said Ross DeVol, Director of Health Economics and Regional Economics at the Milken Institute and principal author of the report. "The good news is that with moderate improvements in prevention and early intervention such as reducing the rate of obesity, the savings to the economy would be enormous."

The study is the first of its kind to estimate the avoidable costs if a serious effort were made to improve Americans' health. Assuming modest improvements in preventing and treating disease, Milken Institute researchers determined that by 2023 the nation could avoid 40 million cases of chronic disease and reduce the economic impact of chronic disease by 27 percent, or $1.1 trillion annually. They report that the most important factor is obesity, which if rates declined could lead to $60 billion less in treatment costs and $254 billion in increased productivity.

Looking even further ahead, the report measures the possible cost to future generations if escalating disease leads to lower investments in education and training. In a snowball effect, the report warns, this loss of human capital and skill building could reduce the nation's economic output by as much as $5.7 trillion in real GDP by the year 2050.

In addition to providing national numbers, the report estimates current and future costs for each of the 50 states. According to the study, on its current path, New Jersey will experience a dramatic increase in chronic disease in the next 20 years. But there is an alternative path. By making reasonable improvements in preventing and managing chronic disease, the state can avoid 1.1 million cases of chronic conditions in 2023. Reasonable improvements in preventing and managing chronic disease could reduce future economic costs of disease in New Jersey sharply, by 27% ($31 billion) in 2023. $26 billion of this would come from gains in productivity, and $5 billion would come from reduced treatment spending.

To reduce the human and economic cost of disease, the Milken Institute calls for:

-- More incentives to promote prevention and early intervention, and;

-- A renewed national commitment to achieve a "healthy body weight."

"This study is a call to action," said Knowlton. "It's time for us in New Jersey to call for a change in how we effectively fight chronic disease. Chronic disease is a crucial driver of health care costs, and its rates are rising. We need to reverse this trend and we need to do it now."

The full report is available at http://www.milkeninstitute.org. An interactive Web site with complete national- and state-level data for each of the chronic diseases is available at http://www.chronicdiseaseimpact.com

About the Milken Institute: The Milken Institute is a nonprofit, independent economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world by helping business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity. It is based in Santa Monica, CA. (http://www.milkeninstitute.org)

About The New Jersey Health Care Quality Institute: The NJHCQI seeks to empower health care purchasers and consumers by publishing the results of objective research, comparative data on providers, and other pertinent educational information so that purchasers and consumers may adopt value-based purchasing practices and be able to make informed decisions on the merits of various health care programs, treatments and services. The NJHCQI was designated as the lead agency in New Jersey for the national Leapfrog Group effort in April 2002.


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SOURCE New Jersey Health Care Quality Institute
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