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What Accounts for the Recent Rise in Health Care Spending? Kenneth E. Thorpe, Ph.D.

What Accounts for the Recent Rise in Health Care Spending? Kenneth E. Thorpe, Ph.D. Robert W. Woodruff Professor and Chair of the Department of Health Policy & Management, Rollins School of Public Health, Emory University kthorpe@emory.edu. AS. The Data.

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What Accounts for the Recent Rise in Health Care Spending? Kenneth E. Thorpe, Ph.D.

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  1. What Accounts for the Recent Rise in Health Care Spending? Kenneth E. Thorpe, Ph.D. Robert W. Woodruff Professor and Chair of the Department of Health Policy & Management, Rollins School of Public Health, Emory University kthorpe@emory.edu AS

  2. The Data • Healthcare Spending growth in spending can be decomposed into: • Change in treated prevalence • Change in spending per treated case • Interactions • About 60 growth linked to treated prevalence increases between 1987 and 2008. Includes both rising clinical incidence (diabetes) and increased treatment intensity (lipids, anti-hypertensives)

  3. Factors accounting for recent growth in spending—differs from the 1940-90 period • Between 1940 and 1990: • Uninsured declined from 90 to 15 percent roughly constant since then. • Medicare and Medicaid • Important treatment innovations including NICU (low birthweight babies), treatment for AMI, stroke, other cardiovascular conditions

  4. Treated Prevalence by Medical Condition, 1987-2008, Adults 18+

  5. What accounts for the rise in prevalence of treated disease? • Increased incidence (diabetes) linked largely to rising obesity • Changing clinical thresholds for treatment (hypertension, lipids) • New medical technologies (SSRI) • Longevity • Changing definitions of disease (diabetes)

  6. Key Drivers of Rising Health Care Costs • Doubling of obesity since 1987 accounts for 7 to 10% of the rise in health care spending (varies by time period). CBO estimates 8%. • Five chronic conditions are key drivers of rising health care spending in Medicare (account for a third of the growth) : • Diabetes (8 percent of growth) • Arthritis (7 percent) • Kidney disease (6%) • Hypertension (6%) • Mental disorders (5%)

  7. Percent of Change in Total Health Care Spending Associated with Obesity, Increased Treatment Intensity and Both Obesity and Treatment Intensity, 1987-2007

  8. The Challenge: Obese workers spend nearly 40% more on health care than normal weight adults, adds about 20 percent to health Care spending For each additional dollar spent to treat health care costs associated with chronic disease, there is an additional $4 lost in productivity Need a better system to avert disease, change behavior and keep chronically Ill patients healthier before entering Medicare and while they are enrolled in the program.

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