Health Affairs

Sue Ducat
Director of Communications
(301) 841-9962
sducat@projecthope.org

From Health Affairs

Unexpected Reasons For Medicare Spending Increases, 1987-2006

Bethesda, MD - An article published today by Health Affairs finds that the causes of Medicare spending growth have changed dramatically over the past two decades. Twenty years ago, most of the increases were due to inpatient hospital services, especially for heart disease, but recent annual increases are the result of outpatient treatment of chronic conditions such as diabetes, arthritis, hypertension, and kidney disease.

Chronic Conditions Account For Rise In Medicare Spending From 1987 To 2006
By Kenneth E. Thorpe, Lydia L. Ogden, and Katya Galactionova
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2009.0474

Thorpe, Ogden, and Galactionova are affiliated with the Rollins School of Public Health at Emory University in Atlanta. Ogden is on assignment from the Centers for Disease Control and Prevention.

This study analyzed data about disease prevalence and about level of and change in spending on the ten most expensive conditions in the Medicare population from 1987, 1997, and 2006. The data were drawn from the 1987 National Medical Expenditure Survey (NMES), and the 1997 and 2006 Medical Expenditure Panel Survey (MEPS). Among the key findings: heart disease ranked first in terms of share of growth from 1987 to 1997. However, from 1997 to 2006, heart disease fell to tenth, while other medical conditions -- diabetes the most prevalent -- accounted for a significant portion of the rise. Furthermore, the authors postulate that increased spending on diabetes and some other conditions results from rising incidence of these diseases, not increased screening and diagnoses. Conclude the authors: "The changing mix of medical conditions driving the rise in Medicare spending had consequential effects. More than half of the beneficiaries are treated for five or more chronic conditions each year. System fragmentation means that chronically ill patients receive episodic care from multiple providers who rarely coordinate the care they deliver, and chronic disease management programs are notably absent in traditional fee-for-service Medicare. As Congress, the administration, providers, insurers, and consumers debate reshaping the U.S. health system, they must address these changed health needs through evidence-based preventive care."

Health Affairs, published by Project HOPE, is the leading journal of health policy. Beginning in January 2010, the peer-reviewed journal appears each month in print, with additional Web First papers published weekly at http://www.healthaffairs.org/. The full text of each Health Affairs Web First paper is available free of charge to all Web-site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund.