presented at hawi'i health policy forum - october 2005 what accounts for the rise in health...

Presented at Hawi'i Health Policy Forum - October 2005

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 ManagementRollins School of Public Health

Emory [email protected]


Overview

• Crafting effective health reform solutions requires a clear understanding of what accounts for the growth in spending

• Key “facts” from the US context1. 80% of total health care spending linked to

chronically ill patients2. Chronically ill receive approximately 50% of all

clinically recommended medical care3. Rise in “treated disease prevalence” accounts

for nearly two-thirds of the growth in health care spending

4. Rise in obesity prevalence in US accounted for 27% of the growth in health spending over the past 20 years.


More than 80% of Health Care Spending on Behalf of People with Chronic Conditions

1 Chronic

Condition,

21%

2 Chronic

Conditions,

18%

3 Chronic

Conditions,

16%

4 Chronic

Conditions,

12%

5+ Chronic

Conditions,

16%

O Chronic

Conditions,

17%


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%


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.


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


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

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Heart Disease Diabetes Cancer Depression High Blood Pressure Back Problems


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%


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)


Changes in Obesity Prevalence, 1978-2000

15.1%

31.0%26.6%

31.1%

49.6%

38.9%

0%

10%

20%

30%

40%

50%

60%

Total BlackFemales

HispanicFemales

1978

2000


Changes in Obesity Prevalence, 1978-2000

6.5%

15.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Children

1978

2000


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

Rise in Obesity Prevalence Holding Technology Constant

= 11%

Rise in Additional Cost Of Treating Obese vs. Normal Weighted Patients

= 16%

TOTAL = 27%


Implications for Reform1. Universal Coverage will need assurance that we

have the ability to control spending- need policy options address both level and growth.

2. Policy options for reform need to attack the key drivers of cost—rising disease prevalence. Reforms need to result in better value care provided to all patients, but in particular to chronically ill patients.

3. 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.


Implications for Reform

4. 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 today—Medicare already has the methodology for risk adjusting payments.

5. 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.


Implications – Slowing the Growth in Spending

1. Key Issues: Slow rise in treated disease prevalence through,

• Slowing the rise in obesity prevalence

2. Policy Tools• School Based Interventions• New and effective health promotion, wellness,

disease prevention programs available for all adults

• Financial incentives to participate


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.

presented at hawi'i health policy forum - october 2005 what accounts for the rise in health...

Documents

hawii health policy

health spending rise

total health care spending

health care reformkenneth

health care spendingrise

obesity prevalence

policy options address

population disease prevalence