Treated disease prevalence and spending per treated case drove most of the growth in health care spending in 1987-2009

Abstract

Analysis of data from the National Medical Expenditure Survey and the Medical Expenditure Panel Surveys from 1987-2009 reinforces previous observations that increased prevalence of treated disease has become the main driver of increased spending on health care in the United States. Higher treated disease prevalence and higher spending per treated case were associated with 50.8 percent and 39.0 percent, respectively, of the spending increase seen in the population ages eighteen and older, while their joint effect accounts for the remaining 10.2 percent. The proportion of increased spending attributable to increased treated prevalence alone is particularly high in the Medicare population: 77.7 percent, compared to 33.5 percent among the privately insured. Moreover, the current findings reveal a substantial contribution to the increase in total spending (10.4 percent) from a doubling of the share of the population considered to be obese and from increases in treatment intensity, a component of spending per treated case (11.9 percent), in 1987-2009. 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.

Keywords: Chronic Care; Cost Of Health Care; Health Spending.