By Martin Hito and Madeline Zick
Healthcare was an expectedly hot issue in the initial 2020 Democratic presidential debates, with candidates clashing over private versus public healthcare systems. In the past decade, lawmakers in Washington battled across the aisle and within party lines, arguing over the economic merits of potential healthcare reforms. And with the increased pressure on Democratic candidates to secure the rural vote, it comes as no surprise that most Democratic candidates have introduced plans specific to rural healthcare.
The candidates are right to focus on healthcare access in rural areas: While 20 percent of Americans reside in rural areas, only 10 percent of physicians practice there, even though these areas contain most of the 133 million Americans with one or more chronic conditions(which nationwide includes more than 100 million living with diabetes or prediabetes, nearly 75 million with high blood pressure, and approximately 6.1 million estimated to have atrial fibrillation). The low density of providers forces patients to travel huge distances to receive necessary care, spending both time and money on long commutes. Compounding these issues, nearly a third of rural hospitals teeter on the brink of closure as they continue to operate at heavy losses. While our healthcare system continues hemorrhaging money from patients, hospitals, and governments alike, we must look for ways to both improve patient care and reduce costs. A large part of that solution lies in the growing use of data-driven tools such as telehealth services and remote patient monitoring.
While 20 percent of Americans reside in rural areas, only 10 percent of physicians practice there, even though these areas contain most of the 133 million Americans with one or more chronic conditions
Positive Telehealth Outcomes in Rural Mississippi and Virginia
Studies show that connected health technologies (the use of electronic information and telecommunication technologies to support and promote long-distance clinical healthcare) can significantly reduce patient and hospital costs. A 2016 study by the University of Mississippi Medical Center (UMMC) tested remote patient monitoring (RPM) on 100 diabetic patients, connecting them to chronic care managers via smart devices. Over the course of a year, the 100 patients saved a combined $339,000 and over 9,400 miles of driving for care. The study went on to estimate that if just 20 percent of Mississippi’s diabetic population were enrolled in a RPM program, the state would save $189 million a year on Medicaid expenditures.
In a similar project, the University of Virginia (UVA) Health System conducted a diabetes management program for rural patients involving remote patient monitoring. Over six months, the patients’ mean hemoglobin A1C levels (a marker for diabetes control) dropped from an uncontrolled 9.9 percent to a much more manageable 7.7 percent. Not only has the UVA program improved health outcomes, but it has also saved patients 18.3 million miles of driving since 2006.
The Solution: Wearable Devices
When we talk about the benefits of telehealth systems and services, the question of how we can implement them on a broad and convenient scale arises—in other words, how do we get remote monitoring technologies in the hands of consumers? Thankfully, the advent of accessible, consumer-based wearable health devices holds the answer. Wearable devices ranging from glucose monitors to smartwatches can aggregate a patient’s health data, remotely storing them for access by healthcare professionals. These wearables are now advanced enough to take in multiple and increasingly clinically-valuable types of health data, ranging from steps traveled to heart rate to ECG readings—and even catastrophic fall detection. As chronic conditions proliferate—and since the death rate among older Americans attributable to catastrophic falls has increased 30 percent from 2007 to 2016—remote monitoring takes on increased importance. Moreover, the data that fuels remote monitoring helps caregivers better individualize treatment and management plans.
Not only do wearable devices help those with diagnosed conditions, but they also help with preventive care: a 2018 UnitedHealth Group program found that when consumers had incentives to track their movement, exercise, and other physiological data through wearables, they on average saved $222 a year in medical costs. A study conducted by the New York Institute of Technology in the same year found that the use of wearables significantly increased physical activity and reduced both the BMI and blood pressure of individuals.
A 2018 UnitedHealth Group program found that when consumers had incentives to track their movement, exercise, and other physiological data through wearables, they on average saved $222 a year in medical costs.
As for getting these devices in the hands of consumers? Some are calling for amending the Internal Revenue Code so wearable devices—or at least a portion of the cost—are eligible for coverage under Flexible Savings Accounts (FSAs). In lay terms, these devices could be purchased using untaxed income that is already set aside for expenses related to medical care not otherwise covered by insurance. Using such devices for a medical purpose would be like knowing the medical risks inherent in your DNA. In fact, the Internal Revenue Service (IRS) just recently determined that consumers can use tax-advantaged FSA dollars to pay for the portion of DNA tests attributable to medical benefits. This is an important precedent because the IRS has acknowledged that items with both a medical and non-medical use—like many wearables on the market today—can be eligible for FSAs, at least to the extent of the medical value to the taxpayer. And the IRS came to this conclusion even though consumer DNA tests are a rather new phenomenon.
Technological progress occasionally renders IRS decisions obsolete, but sometimes Congress must step in to update tax rules. As a recent Tax Notes Federal article points out, the IRS imposed detailed recordkeeping requirements on employers when expensing cell phones they purchased for employees. Those requirements were so onerous that the tax advantage was seldom used. But the IRS maintained that because cell phones can be used for both work and non-work purposes, each and every use must be documented. And yet the productivity benefits of being able to purchase cell phones for employees would far exceed any concerns with tax benefits subsidizing non-work use of employer-bought mobile phones. In 2010, Congress solved the problem with the Small Business Jobs Act of 2010, which de-listed cell phones from the category of items that must be substantiated with overly meticulous record-keeping.
Given the sobering statistics highlighted earlier in this post, we think Congress—or the IRS—must do the same thing for wearable devices with undeniable medical capabilities. In retrospect, effectively blocking employers from tax advantages for cell phones seems obviously penny wise and pound foolish. In 10 years, we may look back on the IRS’ decision to exclude wearables on the grounds that they have benefits beyond just their (enormously valuable) healthcare capabilities through the same lens. Significantly more can be done to put healthcare decisions in the hands of the patient, and that starts with providing more ways for consumers to monitor and manage their health.