Disease incidence, treatment fuel healthcare spending

The rise in healthcare expenditures, particularly in the case of Medicare spending, since 1990 is primarily due to rising treatment prevalence, representing a shift from pre-1990 growth that was spurred by growing incomes, spreading insurance coverage and technological change, according to a study published in the May issue of Health Affairs.

“The current findings strongly suggest that much of the recent discussion about how to control continuing increases in health care spending, particularly among Medicare beneficiaries, may be focused on the wrong set of issues,” wrote Kenneth E. Thorpe, PhD, of Emory University in Atlanta.

“Reducing payments to providers, increasing cost sharing to Medicare patients, or increasing the age of Medicare eligibility would certainly reduce the growth of federal spending on health care. However, these strategies are unlikely to reduce total health care spending by and for Medicare patients.”

Thorpe based his conclusions on an analysis of data from the National Medical Expenditure Survey and the Medical Expenditure Panel Surveys from 1987-2009.

The largest single factor in spending growth was the rise in treated prevalence, which accounted for 50.8 percent of overall growth over the study period and 77.7 percent of growth in Medicare spending, according to Thorpe. Citing several examples of conditions that have increased treatment rates, Thorpe pointed to high blood pressure and diabetes. Target blood pressure levels were lowered in the late 1980s, and in 2002, diabetes guidelines recommended a lower target hemoglobin A1c level for blood sugar control.

Another prominent factor in the overall rise in healthcare spending is obesity. Obesity rates have doubled since 1987, which in turn account for 10.4 percent of the rise in spending, according to Thorpe.

Treatment intensity and spending per case also increased. Combination therapy, as opposed to single medications, became more popular, while imaging rates grew sharply in the early 2000s. Collectively, more aggressive treatments and rising costs per case accounted for 11.9 percent of the overall growth in spending between 1987 and 2009, wrote Thorpe.

Given the trends over the last 20 years, efforts to trim healthcare costs focused solely on reducing payments to providers and increasing cost sharing with Medicare patients may cut Medicare spending. But they will not address the underlying factors of disease prevalence, which would reduce overall costs.

“Constraining the cost of health care will require policy options focused on reducing the incidence of disease, as well as improved understanding of the extent to which more aggressive treatments for chronic conditions do, or do not, result in lower morbidity and mortality,” wrote Thorpe.