Digital Beat

Ten Things About ACP that Ted Cruz Cares About

#2 The Economic Benefit of ACP to the Health Care System

We're sharing ten questions about the Affordable Connectivity Program that Senate Commerce Committee Ranking Member Ted Cruz (R-TX) asked New Street Research Policy Advisor and Brookings Nonresident Senior Fellow Blair Levin testified after a hearing entitled The Future of Broadband Affordability.

2. In response to a question from Sen. Lujan (D-NM) during the hearing, you emphasized that you were not a health care economist. Yet, you claimed the economic benefit of ACP to the health care system would be greater than cost of administering “sometime in the near future.”

a. What evidence do you have to support this claim?

The key points to Levin's answer are briefly summarized immediately below, with a more complete answer provided thereafter.

My written testimony cites many studies indicating significant cost savings and additional studies are included here.
Broadband is a general-purpose technology that produces productivity gains throughout different sectors of the economy. The cost of providing it to those who cannot currently afford it is relatively small compared to the economic gains that such access would provide, in healthcare and other areas.
Two House committees recently unanimously passed extensions to telehealth reforms initially adopted to enable telehealth during Covid, implicitly confirming the value of telehealth to improve outcomes and lower costs. While I am confident that I am directionally correct, there are many ways to run the numbers. It would be helpful in the context of not just the ACP debate, but also for
the future of Medicare, Medicaid, and the Veterans Administration for the Administration and/or Congress to seek an authoritative study on how best to utilize telehealth to improve the outcomes and lower the costs of those programs.
In doing that study, it is important to “skate where the puck is going,” which includes improvements to and increases in the utilization of telehealth.

My written testimony points to numerous studies that point to savings through telehealth. Specifically, I wrote that “It should not be surprising that as a 2021 medical paper found that “Digital literacies and Internet connectivity have been called the ‘super social determinants of health’ because they address all other social determinants of health (SDOH). For example, applications for employment, housing, and other assistance programs, each of which influences an individual’s health, are increasingly, and sometimes exclusively, accessible online. The costs of equipping a person to use the Internet are substantially lower than treating health conditions and the benefits are persistent and significant, making the efforts to improve digital literacy skills and access valuable tools to reduce disparities."

Similarly, a 2018 a Georgetown Business School paper looking at multiple studies found that as to telehealth (referred to in this paper as eHealth) the” deployment of the internet creates the possibility that consumers can access information at significantly lower costs than heretofore possible. But does this access to online health-related information (i.e., eHealth) improve healthcare behaviors and outcomes? We find that eHealth use promotes precautionary and acute healthcare consumption and improves health outcomes."¹

But it is not just good for the patient; it is also good for the patient’s insurance company. As the largest health care insurer, the federal government should want to take advantage of savings such as those seen in a recent study finding the cost savings of using telehealth for patients with cancer ranged from $147 to $186 per visit, or the University of Pennsylvania study showing that telemedicine was 23% less expensive than in-person visits. Cigna found that “average cost of a non-urgent virtual care visit is $93 less than the average cost of an in-person visit. Seeing a specialist averages $120 less for a virtual visit than an in-person visit, while a virtual urgent-care visit averages $141 less than being seen in an urgent care clinic.” Similarly, a 2023 study by the Department of Veterans Affairs found that “veterans who utilized a new tele-emergency service were nearly half as likely to visit an emergency department in-person and showed reduced short-term Veteran visits to emergency departments outside of VA.”

Another area where telehealth can improve both costs and outcomes is with maternal mortality rates. The United States has an alarming trend line in this arena, with an increase of 60% in maternal mortality between 2019 and 2021. At the behest of Congress, the Federal Communications Commission mapped where maternal mortality is highest—and the maps of places where new mothers die at the highest rates look a lot like maps of where household internet subscription rates are low, both being consequences of low household income.

It is worth noting that there are promising ways to address maternal mortality that rely on home broadband for new mothers. In Louisiana, Ochsner Health has had success in using digital tools to monitor at-home blood pressure and other risk factors for pregnant women, resulting in fewer hospital admissions and cesarean section procedures. Such remote maternity online monitoring has reduced unexpected neonatal intensive-care unit admissions by 27 percent.

The healthcare benefits of using digital tools extend beyond maternal mortality. Telehealth is associated with people maintaining their participation in opioid treatment programs and telehealth can reduce the cost of healthcare service delivery with only marginal increases in in-person visits.

These citations are not exhaustive. For example, as a recent article noted “a significant portion of telehealth visits in 2021—44% to be precise—were related to chronic conditions, which are more prevalent in lower-income areas. Research has shown that the use of telehealth services can potentially reduce mortality rates and hospital stays among lower-income patients." In this regard, let me also point to a study cited in the 2010 National Broadband Plan that found that remote monitoring could generate net savings of $197 billion over 25 years from just four chronic conditions.²Further, as the 2010 National Broadband Plan also found “video consultations could lead to $1.2 billion in annual savings through avoiding costs from moving patients from correctional facilities and nursing homes to emergency departments and physician offices.”³ The Plan pointed to even greater savings through the use of telehealth for the Veterans Health Administration (VHA) where a Care Coordination/Home Telehealth (CCHT) program “led to a 25% reduction in bed days of care and a 19% drop in hospital admissions. At $1,600 per patient per year (the cost of the CCHT program), it costs far less than the VHA’s home-based primary care services ($13,121 per year) and nursing home care rates ($77,745 on average per patient per year.)”⁴

This savings should not be surprising. As the Georgetown study noted “online health-related information appears to shift some proportion of healthcare consumption from acute to precautionary care (e.g., via increased doctor visits) and to improve health outcomes (e.g., via reduced hospital stays). As hospital stays are orders of magnitude more costly than typical doctor visits, it would seem that providers (i.e., hospitals) and insurance companies have vested interests in (1) increasing the deployment of broadband technologies, and (2) insuring the health information available online is timely and accurate.”⁵

It is also important to consider how telehealth is becoming more important for certain geographic areas. In 2010, the Plan noted that “Video consultation is especially beneficial for extending the reach of under-staffed specialties to patients residing in rural areas, Tribal lands and health professional shortage areas (HPSAs)” and that at that time sixty-five million people reside in such HPSAs. The number of Americans living in HPSAs is, as of March, now 74,383,347, with rural areas representing nearly 67% of such areas.⁶ This is a problem that is likely to get worse. Since 2005, 104 rural hospitals have closed and more than 600 additional rural hospitals — 30% of all rural hospitals in the U.S. — are at risk of closing in the near future, according to the Center for Healthcare Quality and Payment Reform. There is also a problem with rural hospitals losing services. For example, Texas has seen the greatest number of rural hospital closures, at 25, but also the greatest number of rural hospitals losing services, at 101.

In short, there are many ways that telehealth can reduce costs and improve outcomes. This is not really a debatable point. As a recent witness⁷ testified at a House hearing on telehealth, there is now substantial research demonstrating improved outcomes and access across numerous specialties and a vast array of healthcare services published in recent years.⁸

Another way to consider potential cost savings is through McKinsey’s finding that “evidence prior to COVID-19 shows that telehealth solutions deployed for chronic populations can improve total cost of care by 2 to 3 percent." Medicaid spending in FY 2022 was $804 billion. As to the portion attributable to chronic conditions, a study on the prevalence and medical costs of chronic diseases among the adult Medicaid population noted that “The high prevalence of chronic diseases is a key driver of total U.S. healthcare costs; in 2010, 86% of healthcare spending was for patients with at least one chronic condition, and 71% of spending was for patients with multiple conditions.” The study further noted that “Medicaid has primarily covered low-income children and parents, pregnant women, and the disabled. This population is vulnerable to higher rates of chronic diseases than are seen in the U.S. as a whole or even in the low-income population overall.” Assuring that all Medicaid recipients had access to broadband could, under that analysis, save Medicaid billions.

One could also add savings to the government related to the Veterans Administration. Military families make up nearly half of all ACP recipients. The Veterans Administration budget is about $302 billion with 42%, or $126 billion, allocated to healthcare. Redesigning the system to assure that all veterans can take advantage of telehealth could add additional savings.

None of these studies are ACP focused. But it is reasonable to extrapolate savings on chronic conditions, mortality, hospital stays, emergency room visits, transport, and many other healthcare services. After all, no demographic group is immune from the need for such services. And indeed, as noted above, there are certain savings likely to be greater on a per capita basis for the ACP population than for the general public, such as with monitoring chronic conditions.

Having said that, you are correct in quoting me to the extent that I am not a health economist. The studies cited above suggest that I am directionally correct, but I recognize that there are ways to refine those numbers to provide a more complete and accurate assessment of the potential improvement of outcomes and lower costs of government insured health care if all were connected.

What I hope we could all agree on is that it would be helpful in the context of not just the ACP debate--but also for the future of Medicare, Medicaid, and the Veterans Administration--for the Administration and/or Congress to seek an authoritative study on the issue. I think it should be framed in terms of what COVID has taught us about the future of healthcare delivery. That episode accelerated the movement to online healthcare, and it would serve many public policy purposes to have such a study.

In doing that study, we should incorporate the wisdom of Wayne Gretzky, who famously said that the key is to skate to where the puck is going. So here, there is a movement by multiple stakeholders to use telehealth generally to improve outcomes and lower costs. We should not only understand that movement, but we should restructure our government’s healthcare insurance policies (Medicare, Medicaid, and medical services provided by the Veterans’ Administration) to take advantage of the opportunities created by modern communications technology. After all, as discussed in my testimony, broadband is a general-purpose technology that produces productivity gains throughout different sectors of the economy. The cost of providing it to those who cannot currently afford it is relatively small compared to the economic gains that such access would provide, in healthcare and other areas.

In this regard, let me point to and praise the House Ways and Means Committee for its recent passage of the Preserving Telehealth, Hospital, and Ambulance Access Act by a vote of 41-0 and the House Health Subcommittee of the Energy and Commerce Committee for its unanimous vote supporting the Telehealth Modernization Act of 2024. I hope the House and then the Senate follow. These Acts extend numerous provisions adopted to address healthcare needs clearly demonstrated during the COVID crisis.

Two points about it are particularly notable for our discussion of the ACP. First, the legislation recognizes that while the COVID emergency is over, the movement to online delivery of essential services is not. Second, it did not make the changes permanent. It created extensions, so that legitimate issues raised in the debate could be studied before adopting more permanent rules. There is wisdom in both that applies to the ACP; a recognition of the importance of telehealth for healthcare delivery and the willingness to keep the status quo while studying the details before adopting longer-term rules.

But perhaps the most important message from the unanimous votes in the Committees is this. While the House has many issues on which there is huge canyons separating the views of the members, it is apparently in agreement that increased access to telehealth will result in improved outcomes and/or lower costs. If not, why would they have voted to provide increased access to telehealth? And if so, don’t we want all lower income American families whose health insurance is provided by the government to take advantage of the efficiencies that the House Committees clearly saw in their unanimous actions to extend the telehealth provisions?

In short, given the amount the United States spends on Medicare and Medicaid, universal, sustainable broadband should be seen as a huge opportunity to improve health outcomes while lowering costs. We should seize that opportunity.

b. Please specify what you mean by “sometime in the near future.”

There are many variables that can affect the timing of any technology trend, including government policies. But given the trends that I see in communications, artificial intelligence, and healthcare delivery, I think in 3-5 years it should be clear that just as being online is, in Congress’ words, “essential to full participation in modern life in the United States” and the affordability barrier to adoption is a barrier to the “equitable distribution of essential public services, including health care,” it will be clear that every provider of health insurance will want to make sure all the persons they cover have in home access to telehealth.

More in this Series

Notes

Macher, Jeffrey T., John W. Mayo and Olga Ukhaneva "Does the Internet Improve Consumer Healthcare Behaviors, Georgetown University working paper, October 29, 2018.
Robert Litan, Better Health Care Together Coalition, Vital Signs Via Broadband: Remote Health Monitoring Transmits Savings, Enhances Lives (2008), available at http://www.betterhealthcaretogether.org/Library/ Documents/VITAL%20SIGNS%20via%20BROADBAND %20FINAL%20with%20FOREWORD%20and%20 TITLE%20pp%2010%2022.pdf
CITL, The Value of Provider-to-Provider Telehealth Technologies. CITL modeled pre- and post-telehealth costs based on national baseline number of transports, transport cost, and number of avoided transports. Annual savings were calculated by subtracting post telehealth costs from pre-telehealth costs for each provider-to-provider setting. These savings sum to $1.2 billion.
Adam Darkins et al., Care Coordination/Home Telehealth: The Systematic Implementation of Health Informatics, Home Telehealth, and Disease Management to Support the Care of Veteran Patients with Chronic Conditions, 10 Telemed. & e-Health 1118, 1118 (2008), available at http://www.liebertonline.com/doi/ pdf/10.1089/tmj.2008.0021?cookieSet=1
Macher, Jeffrey T., John W. Mayo and Olga Ukhaneva "Does the Internet Improve Consumer Healthcare Behaviors, Georgetown University working paper, October 29, 2018.
Bureau of Health Workforce Health Resources and Services Administration (HRSA) U.S. Department of Health & Human Services. BCD_HPSA_SCR50_Qtr_Smry.pdf
The witness was Lee Schwamm, MD, FAHA, the Associate Dean of Digital Strategy & Transformation at the Yale School of Medicine and the Senior Vice President and Chief Digital Health Officer for the Yale New Haven Health System. The witness is also a professor of Neurology and Biomedical Informatics & Data Sciences.
The testimony can be found at https://democrats-energycommerce.house.gov/sites/evo-subsites/democrats-energycommerce.house.gov/files/evo-media document/Lee%20Schwamm_Witness%20Testimony_04.10.2024.pdf. The testimony cited referred to a recent study that can be found at Kevin K Wiley, Johnson J, Coleman C, Olson C, Chuo J, McSwain SD. Translating Value Across Telehealth Stakeholders: A Rapid Review of Telehealth Measurement Evidence and a New Policy Framework to Guide Telehealth Researchers. Telemedicine and e-Health. April 2, 2024. tps://doi.org/10.1089/tmj.2023.0211

Blair Levin is the Policy Advisor to New Street Research and a nonresident senior fellow at Brookings Metro. Prior to joining New Street, Blair served as Chief of Staff to FCC Chairman Reed Hundt (1993-1997), directed the writing of the United States National Broadband Plan (2009-2010), and was a policy analyst for the equity research teams at Legg Mason and Stif Nicolaus. Levin is a graduate of Yale College and Yale Law School.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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