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Can Digital Health Reduce the Cost of Care for Chronic Diseases?

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Published on May 18, 2022

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This white paper represents the views of the author, not America’s Health Insurance Plans (AHIP). The publication, distribution or posting of this white paper by AHIP does not constitute a guaranty of any product or service by AHIP.

Despite major investments in health care, chronic disease in the United States is at an all-time high and overall patient outcomes are only showing incremental improvement. Research shows that individual behavior and social and environmental factors account for 60% of avoidable mortality. Yet, investment and innovation in chronic disease care have been directed almost exclusively to improvements in health care therapies, which account for only 10% of individual outcomes.

Why has so little attention been given to behavior and psychosocial solutions to chronic disease? These factors represent a revolution waiting to happen in service delivery, yet the current fee-for-service reimbursement model does not incentivize the use of this kind of innovation by service providers or incumbents. Meanwhile, the potential benefits to employers and to the public are immense.

As the cost of chronic diseases reaches into the trillions of dollars per year, it is encouraging that the broader economic and social pressures to transform health care have intensified. Employers are feeling this pressure acutely, particularly those that are self-insured, and have seen the cost of employee health care increase substantially in recent years. As employers investigate the root causes, they are finding the cost of chronic disease management to be a major driver.

This has created a market for new solutions and an appetite for alternatives to the traditional approaches. Simultaneously, Americans are showing a growing acceptance of digital health solutions that can complement and strengthen traditional care. Further bolstered by federal legislation supporting patient-centered, value-based care, the healthcare space today is ripe for innovative digital entrants to re-engineer the industry’s approach to chronic disease care.