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USC-Brookings Schaeffer on Health Policy

Can we reduce childhood asthma and lower costs, too?


Asthma can be a frightening disease, especially for young children struggling to breathe during an asthma attack. Parents can be equally scared watching their child gasp for breath, not sure how to help. 800,000 times a year panicked parents rush their asthmatic child to the emergency department (ED) and cost the health system $27 billion a year.1,2  Non-medical costs are also significant, as children with asthma miss over 14 million school days, and their care results in parents missing over 14 million work days.3 Further, uncontrolled asthma is most common among families living in substandard housing, where environmental triggers such as dust and mold in addition to limited understanding of how to avoid attacks.  There must be a way to break this pattern, help families reduce asthma attacks, and save money at the same time.

Fortunately, many practices and clinical leaders are developing strategies to help children and their families manage asthma more effectively. One example is the Community Asthma Initiative (CAI) based in Boston, Massachusetts.  CAI uses community health workers to visit families of children with serious asthma, help them understand what can trigger attacks and how to avoid them. The CAI even pays for equipment such as vacuum cleaners and pest management supplies to help reduce indoor environmental pollutants that exacerbate asthma symptoms. These programs work: the CAI saved more than $80,000 in the first 3 years of the program and demonstrated a return on investment (ROI) of 1.33. The initiative also contributed to reductions in ED visits (57 percent) and hospital admissions (80 percent), and fewer reported school and work absences.4

These results suggest a win-win: children can be healthier and communities can save money. But the medical system is set up to treat illness, not necessarily to improve health. Health payers, such as Medicaid and private insurance, are used to paying for traditional medical services—often very expensive ones, such as ED treatment or hospitals stays— but not for less expensive  non-medical services, such as parent education, home inspections, and cleaning supplies.  The successful CAI demonstration could not be continued without cobbling together grants from other funding sources to offset the costs of non-medical services.  However, the sustainability of grant funding is uncertain, and illustrates why proven interventions like the CAI never get built into normal practice and the cycle of poor health and high costs continue.

What Can Be Done?

The big challenge is to restructure the health system to reward good health rather than only compensating in the event of illness.  Doing so would involve paying less for treating the complications of asthma, for example, and offer more significant incentives for services that prevent and mitigate complications.  This would involve attempting to measure events that do not happen and costs that do not occur, an approach that does not align with current payment models.

Both public and private payers are currently experimenting with alternate payment models such as Accountable Care Organizations (ACOs) and patient-centered medical homes (PCMH) that provide opportunities for increased delivery flexibility, enabling physicians to provide care that patients need to be truly healthy. (For more information, check out our asthma MEDTalk.) These models encourage and reward management and tangible improvements in population health so that events that do not happen and costs that do not occur are valued.

However, several difficulties remain, even in a delivery system where payments reward prevention, wellness, and outcomes.


Accounting for financial and clinical risk. Public and private insurance systems are risk averse. They understand that prevention can work, but not all of the time. They are fearful that they could end up paying twice: once for the intervention, such as education and home visits; and again for treatment if prevention does not work  and the child goes to the hospital anyway.

Clinical risk-adjustment is important too. In order for savings to outweigh the costs of prevention, the intervention must be delivered to the patients most likely to benefit. Identifying these high-risk patients takes time and money, but is critical to maximizing resources.

Tracking Where Savings Accrue.  Many social interventions paid for by the medical system, such as Medicaid funded supportive housing for the chronically homeless, accrue benefits to other agencies such as the criminal justice, housing, public health, education, Supplemental Nutrition Assistance Program (food stamps), Veterans Affairs, etc. Any organization would be hard-pressed to foot the entire bill for potential savings that would accumulate to others.

Who Can Help?

  • Physicians and other health providers are aware of the inefficiencies in the care they deliver based on the constraints they face, and have an opportunity to take leadership roles and help drive the system toward rewarding health.
  • Payers who see their costs rising without quality improving, can help transform the system. Layering on incremental, complex rules won’t help.  Data sharing is also important.
  • Policy makers at the local, state, and federal level should encourage an environment of innovation and legislative support for the health system to evolve into a highly functioning, efficient, and patient-focused ecosystem.

If clinicians, payers, policy-makers, and patients can work together, there is great promise to truly achieve the triple aim — and help us all breathe a little easier.


1 American Lung Association. (2013). Asthma & Children Fact Sheet. Retrieved from:

2Barnett, SL. and Nurmagambetov, TA. (2011). Costs of asthma in the United States: 2002-2007. Journal of Allergy and Clinical Immunology, 127 (1), 145 – 152. Retrieved from:

3 Harty, M and Horton, K. (2013). Using Medicaid to Advance Community‐Based Childhood Asthma Interventions: A Review of Innovative Medicaid Programs in Massachusetts and Opportunities for Expansion under Medicaid Nationwide. Issue Brief from the Childhood Asthma Leadership Coalition. Retrieved from:

4Bhaumik U, Norris K, Charron G, Walker SP, Sommer SJ, Chan E, et al. (2013). A cost analysis for a community-based case management intervention program for pediatric asthma. J Asthma, 50(3), 310–7. Retrieved from:

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