Title: What Accounts for the Rise in Health Care Spending and What to Do About It: Future Directions for Health Care Reform
1What 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
2Overview
- 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.
3More than 80 of Health Care Spending on Behalf
of People with Chronic Conditions
4Distribution 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
5Issue 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.
6Why Does Real Per Capita Health Spending Rise
Over Time?
- Rise in Treated Disease Prevalence
- Rise in Spending Per Treated Case
- Both
7Rise 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
8Percent 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
9What Accounts for The Rise in Treated Disease
Prevalence?
- Rise in Population Disease Prevalence fueled by
obesity and other risk factors - Changes in threshold for treating asymptomatic
patients (hypertension, hyperlipidemia, the
metabolic syndrome) - Innovation (SSRI, statins, medical devices)
10Changes in Obesity Prevalence, 1978-2000
11Changes in Obesity Prevalence, 1978-2000
12Rise 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
13Implications 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.
14Implications 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.
15Implications 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
16Summary
- 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.