This Hot New Technology Can Save Medicare
Age + Reason

This Hot New Technology Can Save Medicare


With 77 million aging American Baby Boomers, Medicare must find innovative ways to improve care and reduce costs. Telehealth—where patients consult with doctors via Skype or some other Internet service--is one good solution

Pharmacy giant Walgreens is on board. But will Congress pass the Medicare Telehealth Parity Act of 2015? The value of telehealth is indisputable and America could lead the world in showing how it saves time and expense.

Related: Millions Face a 50% Medicare Premium Hike If Congress Doesn’t Act

While current American (and most other national or in the case of Europe, regional) law treats telehealth as a solution only for remote rural clinics, the proposed legislation would expand the service to urban centers where more and more of us live. This update would come at a time when the nation’s demographics demand a forward-looking policy approach. Telehealth ought to be an essential part of age-friendly cities.

Telehealth would yield multiple benefits:

  • Improve care through rapid response, especially for those older citizens who might be less mobile.
  • Lower health expenses by avoiding unnecessary doctor visits.  
  • Drive economic growth by redirecting resources. 

It’s not hard to imagine how this works:  Intel, for example, already has telehealth solutions based on the Internet of Things – a system of “smart” devices that communicate wirelessly – enabling doctors to easily review a patient’s health through wearable devices and predictive analytics.

If we get the policy framework right – which our legislators on Capitol Hill are now debating – the benefits of telehealth will snowball. Essentially, the right telehealth landscape could position the growing market of older adults to drive innovation, while reducing costs.

Related: Big Premium Increases for Medicare Part D Drug Plans

Consider telehealth’s potential role in lowering hospital readmissions and ER visits, as two examples. Or the supplement it will provide to doctors, nurses and caregivers to our aging population.  If telehealth were to reduce hospital readmissions, family and corporate balance sheets would benefit almost as much as the patients in need. Readmissions totaled $41 billion in spending in 2014. And ER visits, which cost $1,200 on average, exceed the average American’s monthly rent.

These costs, of course, are particularly common among older adults with chronic conditions. Among one small sample of patients, a study by Banner Health and Philips found that telehealth reduced hospitalization by 45 percent and the cost of care by 27 percent. If the results are replicated on a larger scale, telehealth could save billions for patients and insurers.  

First, however, we need to get public policy right.  Consider these two examples:

Related: Audit Uncovers $124.7 B of Overpayments and Fraud in Medicare and Medicaid

Medicare Part D cut billions in medical costs and improved older Americans’ health by enabling access to pharmaceutical breakthroughs. As a result, an increased number of older patients could effectively manage their conditions. Without costly ER visits and hospital stays, patients avoided unnecessary expenditures. With Part D Medicare reforms, seniors’ hospital admissions dropped 8 percent overall, particularly in conditions that require strict medical adherence; those patients alone avoided 77,000 fewer annual admissions. In the first full year of the program, Part D realized $13.4 billion in overall savings.

Home care has achieved significant savings compared to hospital care, according to a variety of studies and projects. Research shows that home care could decrease long-term savings by easing access to high-cost institutional day-to-day care. For example, this summer CMS found that participants in the first year of an in-home care demonstration study saved more than $25 million, an average of $3,070 per beneficiary.

We might be able in a short time to claim the same benefits for telehealth. Congress: the digital ball is in your court. In the process, you can lead the world on one solution for the health burdens of the aging of global populations.