For immediate release
Tuesday, Aug 22, 2006
12:01 a.m. EDT

 

Contact:
Christopher Fleming
301-347-3944
cfleming@projecthope.org

Medicare Beneficiaries Treated For Five Or More Chronic Conditions Account For Virtually All Program Spending Growth

Physicians Are Treating Both Obese And Normal-Weight Patients More Aggressively

Bethesda, MD -- Virtually all of the growth in Medicare spending over the past 15 years can be traced to patients who were treated for five or more medical conditions during the year, according to a new study by economists Kenneth Thorpe and David Howard released today as a Web Exclusive on the Web site of the journal Health Affairs.

The number of Medicare beneficiaries with multiple conditions has risen sharply over time, from 31 percent of Medicare patients receiving treatment for five conditions or more in 1987, to more than half in 2002. These beneficiaries alone accounted for 76 percent of total Medicare spending in 2002, up from 52.2 percent in 1987. More than 92 percent of health spending in 2002 was incurred by beneficiaries with three or more conditions during the year.

Obesity was a major factor behind Medicare spending increases. The study, which examines trends in annual Medicare spending from 1987 to 2002, found that while obesity rates among Medicare patients doubled during the period, spending on those patients nearly tripled, from 9.4 percent of Medicare spending in 1987 to 25 percent in 2002.

“What this study tells us is that we need to aggressively put in place interventions to deal with obesity and chronic disease prevalence among the elderly to control spending,” said Thorpe, the Robert W. Woodruff Professor and chair of the Department of Health Policy Management at Emory University’s Rollins School of Public Health. “We need interventions that go beyond what current Medicare policy does, to reach the ‘near elderly’ and work with people before they approach the age of Medicare eligibility to fight obesity and chronic disease. The policy debate must shift away from one that focuses on health plan competition as the way to control costs.”

Physicians Treating Both Obese And Non-Obese Patients More Aggressively

While obesity contributed significantly to higher Medicare spending, “increases in the share of non-obese beneficiaries treated for five or more medical conditions show that there are other factors at work,” say Thorpe and Howard, an assistant professor at Rollins. The share of normal-weight beneficiaries being treated for five or more conditions rose from 11.5 percent of all beneficiaries in 1987 to 16 percent in 2002, and the share of Medicare spending accounted for by this group rose from 19.6 percent in 1987 to 24.1 percent in 2002.
 
Thorpe and Howard say one explanation for the increase in both obese and normal-weight beneficiaries is that “physicians are more aggressively targeting healthier beneficiaries over time.” In 2002, nearly 60 percent of Medicare beneficiaries treated for five or more conditions reported being in excellent or good health, versus only 33 percent in 1987.

Thorpe and Howard use metabolic syndrome, a cluster of cardiovascular-related risk factors that affect nearly half of all beneficiaries, as a case study of how treatment is becoming more aggressive. In the 1988-94 period, about 57 percent of beneficiaries with metabolic syndrome received treatment for diabetes, high blood pressure, or low levels of high-density lipoprotein (HDL, or “good”) cholesterol, conditions associated with the syndrome. By 1999-2002, about 68 percent of beneficiaries with metabolic syndrome were being treated for at least one of these three conditions. The share of patients treated for low HDL cholesterol increased most drastically, from 9.7 percent to 27.5 percent, and the share of patients being treated for two of the three conditions more than doubled.

“This is the first time anyone has examined the prevalence of treatment for metabolic syndrome among Medicare beneficiaries, which affects half the Medicare population,” said Thorpe. “Physicians are more aggressively treating these patients now, which in the interim is driving up spending. But the real question is whether treatment is improving quality of life and increasing longevity.” In their article, Thorpe and Howard warn that increased longevity may mean increased costs even in the long run, “as increases in longevity for people with chronic conditions prolong the period over which they incur high costs year in and year out.”

Medicare Spending Growth By Condition

Thorpe and Howard found that six of ten health conditions accounted for two-thirds of the rise in spending. Those conditions included mental disorders, heart disease, and three of the medical conditions associated with metabolic syndrome: hypertension (high blood pressure), diabetes, and hyperlipidemia (low HDL cholesterol).

Specifically:

-- Hypertension, diabetes, and hyperlipidemia accounted for 16.1 percent of increased Medicare spending in the 15-year-period
-- Spending on heart disease accounted for 12 percent of the increase
-- Spending to treat mental disorders such as depression and anxiety accounted for nearly 10 percent of the rise in spending; in 1987, 8 percent of Medicare patients were treated for mental disorders, but by 2002 that number jumped to 19 percent

“One of the biggest challenges we face is that the Medicare system makes it very difficult for physicians to effectively treat people with multiple chronic illnesses,” said Thorpe. “Medicare’s fee-for-service structure does not reimburse for services critical to medically managing chronic illness -- preventative measures, monitoring medication intake, and blood sugar.”

Thorpe and colleagues analyzed data from the 1987 National Medical Expenditure Survey and the 2002 Medical Expenditure Panel Survey to assess changes in treated disease prevalence and spending, and the National Health and Nutrition Examination Survey to assess the clinical and treated prevalence of metabolic syndrome.

The article by Thorpe and Howard is the second study of national data analyzing the relationship between treated disease and increases in health care spending. In 2005, Thorpe and colleagues traced nearly two-thirds of private health spending growth to three factors: the persistent rise in obesity; increased number of patients managing chronic diseases; and the availability of new, frequently costly treatment options.

You can read the article by Thorpe and Howard at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w378

You can read a short Perspective commenting on this study, written by Dana P. Goldman and Neeraj Sood of the Bing Center for Health Economics at RAND and the National Bureau of Economic Research, at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w389

You can read a short response by Thorpe and Howard to Goldman and Sood’s Perspective at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w391

ABOUT HEALTH AFFAIRS:

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.

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©2006 Project HOPE–The People-to-People Health Foundation, Inc.