EMBARGOED for release
Wednesday, Aug. 25, 2004, 12:01 a.m.
 

For more information, contact
Kari Root or Eliza Brinkmeyer at 301-652-1558
or Jon Gardner at Health Affairs, 301-347-3930


SIGNIFICANT RISE IN NUMBER OF PEOPLE TREATED
FOR MENTAL DISORDERS AND SELECTED CHRONIC ILLNESSES
DRIVING UP HEALTH SPENDING


Study Shows That Five Of The Most Expensive Medical Conditions
Account For Nearly One-Third of Health Spending Growth Between 1987 and 2000

Bethesda, MD — Health care spending rose nearly $200 billion between 1987 and 2000, thanks to a rise in the number of individuals who were treated for a handful of chronic conditions as well as an increase in the cost of treating patients with selected medical conditions, says a new study that appears today as a Web Exclusive in the journal Health Affairs. The study, by Emory University economist Kenneth Thorpe and colleagues, shows that five of the most costly medical conditions accounted for 31 percent of the growth in health spending over that period. The U.S. health bill is growing rapidly, in large part because more people are getting treated for mental disorders, cerebrovascular disease, pulmonary disease, and diabetes, they say.

Using data from the 1987 National Medical Expenditure Survey and the 2000 Medical Expenditure Panel Survey, the authors looked at health care spending by patients with the 15 most costly medical conditions, examining how it was affected by changes in the number of cases treated, population growth, and cost per case.

They found that substantial increases in the number of people being treated accounted for

—59 percent of the increased spending on mental disorders
—60 percent of the increased spending on cerebrovascular disease such as stroke and cerebral ischemia
—42 percent of the increased spending on pulmonary disorders
—50 percent of the increased spending on diabetes

In 8 of the top 15 medical conditions, the authors found that a rise in the cost per treated case —rather than rising numbers of cases treated — accounted for most of the growth in spending.
For example, there was very little change in the number of people treated for heart disease between 1987 and 2000. However, the rise in the cost per treated case, due chiefly to more expensive and effective drugs and technologies, is what accounted for nearly 70 percent of the rise in medical spending over that period. The rise in cost per treated case of hypertension also accounted for 60 percent of the overall growth in spending. Although the treated prevalence of trauma declined between 1987 and 2002, the cost per treated trauma case rose significantly over that period.

“If we really want to get a handle on rising health care costs, we need to analyze what it is we’re spending money on, instead of where we’re spending the money,” says lead author Thorpe, the Robert W. Woodruff Professor and Chair, Department of Health Policy and Management, Rollins School of Public Health at Emory University. “By focusing on a disease-based analysis of spending, we can compare the medical benefits we are purchasing,” he adds.

Between 1987 and 2000, the 15 most expensive medical conditions were heart disease, mental disorders, pulmonary conditions, cancer, trauma, hypertension, diabetes, back problems, arthritis, cerebrovascular disease, skin disorders, pneumonia, infectious disease, endocrine disorders, and kidney disease. These accounted for about half of the overall growth in spending.

The authors note that for some conditions, such as back problems and endocrine disorders, a rise in spending can be attributed to an increase in both treated prevalence and cost per case. In other cases, this rise in spending can be representative of either an increase in the causes of disease, such as environmental factors, or increased access to care.

Mental disorders are a case in point. Although the prevalence of mental disorders stayed reasonably stable between 1987 and 2000, the number of people treated for this condition nearly doubled, from 4,373 to 8,575 cases per 100,000. This surge was due to both a boost in the identification and diagnosis of these disorders, as well as the increased availability and awareness of psychotropic medications.

The authors estimate that population growth accounted for 19–35 percent of the increase in spending across the 15 medical conditions, showing that demographic factors, in addition to changes in medical technology, have an effect on spending changes over time. An increase in prevalence of other diseases, such as diabetes and pulmonary disease, may be attributable to environmental factors. The growth of diabetes among the population is closely tracked with the rise of obesity. Death rates and prevalence of asthma, the leading pulmonary disease, have risen since 1975. This increase has been linked to environmental factors, including smoking, dust mites, and poor air quality. These two conditions alone attributed to more than 12 percent of the growth in spending.

The authors warn that the study is based on self-reported data, which may result in underreporting of medical conditions and spending. The analysis includes only the noninstitutionalized population. The authors did not take into account spending on medical conditions that may have occurred in a nursing home.

They say that further research is needed to determine whether this increase in spending is resulting in increased medical benefits, or whether the same improvements in health care could be purchased at a lower cost.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Copies of the 25 August 2004 Web Exclusive “What Medical Conditions Account for the Rise in Health Care Spending,” can be obtained at www.healthaffairs.org. Address inquiries to Jon Gardner, Health Affairs, at 301-347-3930, or via e-mail, jgardner@projecthope.org. Health Affairs Web Exclusives are supported in part by a grant from the Commonwealth Fund.

###

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Additional peer-reviewed papers are published weekly online as Health Affairs Web Exclusives at www.healthaffairs.org. Health Affairs Web Exclusives are supported in part by a grant from the Commonwealth Fund.

©2004 Project HOPE–The People-to-People Health Foundation, Inc.