The growth in cost per case explains far more of US health spending increases than rising disease prevalence

Abstract

Some prior research has suggested that health spending for many diseases has been driven more by increases in so-called treated prevalence-the number of people receiving treatment for a given condition-than by increases in cost per case. Our study reached a different conclusion. We examined treated prevalence, clinical prevalence-the number of people with a given disease, treated or not-and cost per case across all medical conditions between 1996 and 2006. Over this period, three-fourths of the increase in real per capita health spending was attributable to growth in cost per case, while treated prevalence accounted for about one-fourth of spending growth. Our evidence suggests that most of the treated-prevalence effect is due to an increase in the share of eligible people being treated rather than an increase in clinical prevalence of diseases. We conclude that efforts to curb health spending should focus more on reining in cost per case.