What Accounts for the Rise in Health Care Spending and What to Do About It: Future Directions for Health Care Reform - PowerPoint PPT Presentation

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What Accounts for the Rise in Health Care Spending and What to Do About It: Future Directions for Health Care Reform

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Title: What Accounts for the Rise in Health Care Spending and What to Do About It: Future Directions for Health Care Reform


1
What Accounts for the Rise in Health Care
Spending and What to Do About It Future
Directions for Health Care Reform
Kenneth E. Thorpe, Ph.D. Robert W. Woodruff
Professor and Chair Department of Health Policy
and Management Rollins School of Public
Health Emory University kthorpe_at_sph.emory.edu
2
Overview
  • Crafting effective health reform solutions
    requires a clear understanding of what accounts
    for the growth in spending
  • Key facts from the US context
  • 80 of total health care spending linked to
    chronically ill patients
  • Chronically ill receive approximately 50 of all
    clinically recommended medical care
  • Rise in treated disease prevalence accounts for
    nearly two-thirds of the growth in health care
    spending
  • Rise in obesity prevalence in US accounted for
    27 of the growth in health spending over the
    past 20 years.

3
More than 80 of Health Care Spending on Behalf
of People with Chronic Conditions
4
Distribution of Medical Care Spending by Number
of Chronic Health Care Conditions, 2001
Number of Chronic Health Care Conditions Percent of Total Health Care Spending Percent of Population
0 1 2 3 4 5 Total All Chronic Care 17 21 18 16 12 16 83 55 24 11 5 4 1 45
5
Issue Level vs. Change in Spending
  • Level US Spends 50 more per capita than
    European countries
  • Traced to higher clinical and administrative
    expenses, fragmented purchases, and ultimately
    higher prices
  • Change Growth in spending in US has risen faster
    that 19 of 23 OECD countries between 1980 and
    2003.

6
Why Does Real Per Capita Health Spending Rise
Over Time?
  1. Rise in Treated Disease Prevalence
  2. Rise in Spending Per Treated Case
  3. Both

7
Rise in Treated Disease Prevalence Linked to the
Rise in Obesity Key Single Largest Driver of
Health Care Spending Over Time- Accounts for 62
of Rise in Per Capita Spending
8
Percent of Privately Insured Population Treated,
By Medical Condition, 1987-2002
Medical Condition 1987 2002
Mental Disorders Hyperlipidemia Hypertension Diabetes Pulmonary Conditions (OPD, Asthma) Lupus/Other Related Arthritis Back Problems Upper GI Kidney Problems 4.7 1.4 9.3 2.4 9.3 4.2 4.6 4.6 2.6 0.7 11.0 7.4 12.0 4.0 17.7 6.5 7.6 8.1 7.0 1.3
9
What Accounts for The Rise in Treated Disease
Prevalence?
  1. Rise in Population Disease Prevalence fueled by
    obesity and other risk factors
  2. Changes in threshold for treating asymptomatic
    patients (hypertension, hyperlipidemia, the
    metabolic syndrome)
  3. Innovation (SSRI, statins, medical devices)

10
Changes in Obesity Prevalence, 1978-2000
11
Changes in Obesity Prevalence, 1978-2000
12
Rise in Treated Disease Prevalence Linked to the
Rise in Obesity Key Single Largest Driver of
Health Care Spending Over Time
Change in Spending Over Time, 1987-2002 Change in Spending Over Time, 1987-2002
Rise in Obesity Prevalence Holding Technology Constant 11
Rise in Additional Cost Of Treating Obese vs. Normal Weighted Patients 16
TOTAL 27
13
Implications for Reform
  • Universal Coverage will need assurance that we
    have the ability to control spending- need
    policy options address both level and growth.
  • Policy options for reform need to attack the key
    drivers of costrising disease prevalence.
    Reforms need to result in better value care
    provided to all patients, but in particular to
    chronically ill patients.
  • Change how plans are paid and compete.
  • Drive competition around specific chronic
    diseases that accounts for the most spending,
    most of the growth in spending. Ability to
    effectively treat multiple chronic conditions.

14
Implications for Reform
  • Develop captitated payment based on
  • Annual cost of providing all clinically
    recommended care for patients with single or
    multiple chronic illnesses (starting to occur in
    the market todayMedicare already has the
    methodology for risk adjusting payments.
  • Compete on value
  • Best clinical outcomes at lowest cost
  • No co-pays or deductibles for clinically
    recommended services.
  • Assures access to state-of-the-art care by most
    vulnerable patients.

15
Implications Slowing the Growth in Spending
  • Key Issues Slow rise in treated disease
    prevalence through,
  • Slowing the rise in obesity prevalence
  • Policy Tools
  • School Based Interventions
  • New and effective health promotion, wellness,
    disease prevention programs available for all
    adults
  • Financial incentives to participate

16
Summary
  • Changes outlined above requires fundamental
    restructuring of US and most European health care
    systems
  • Structure competition among health plans, provide
    groups around key chronic conditions
  • Develop national strategy for addressing rise in
    treated disease prevalence
  • Devote resources to developing effective health
    promotion, wellness programs for use in schools,
    and the worksite.
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