The Rising Costs of Healthcare: Causes and Solutions

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The Rising Costs of Healthcare Causes and
Solutions

• 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

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Overview

• Crafting effective health reform solutions
  requires a clear diagnosis of what accounts for
  the growth in spending
• Key facts from the US context
• 75 of total health care spending linked to
  chronically ill patients
• Chronically ill receive approximately 56 of all
  clinically recommended medical care
• Rise in prevalence of treated disease accounts
  for a substantial share of the growth in health
  care spending.

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Overview

• Rise in obesity prevalence in US accounted for
  34 of the growth in health spending over the
  past 20 years.
• Substantial dollar volume rise in spending linked
  to modifiable individual risk factors
• Current cost containment initiations and debate
  largely ignore the central role of prevention.
  We are not going to solve the spending growth
  through a singular focus on health insurance
  redesign (i.e. HSAs, higher co-pays).

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Rise In Spending

• Equals
• Change in treated prevalence
• Change in spending per case treated
• interactions

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Why Does Treated Prevalence Rise Over Time?

• Rise in Population Disease Prevalence
• Technology (treatment expansion)
• Changes in clinical thresholds (metabolic
  syndrome) for treating asymptomatic patients
• Better disease detection and screening (both by
  patients and physiciansdepression)
• Longevity
• Others?

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Rise In Population Disease Prevalence and Health
Care Spending

• Largely ignored as independent factor
• Linked largely to rise in obesity and recognition
  of the metabolic syndrome as an independent
  cardiovascular risk factor
• Total diabetes prevalence has increased 53 over
  the past 20 yearstreated diabetes prevalence has
  increased by 43
• All the increase linked to a doubling of obesity
  prevalence among adults (i.e. obesity prevalence
  by BMI class has been constant over time)

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Changes in Obesity Prevalence Among Adults
1978-2002
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Changes in Obesity Prevalence Among Children,
1978-2002
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Trends in Total and Treated Diabetes Prevalence,
1980- 2000
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Rapid Rise in Treated Disease Prevalence Among
Obese!
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Chronic Disease Prevalence by Body Mass Index
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Trends in Technology

• Impacts both prevalence and spending per case
• Numerous examples
• Pharmacologic (SSRI, statins)
• Medical supplies and devices (drug-eluting
  stents)
• New treatments (low-birth babies, CVD, cancer)

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More Aggressive Treatment of Asymptomatic Patients

• True for
• Metabolic syndrome (31 of the population)
• Hypertension
• Hyperlipidemia
• Other lipid abnormalities

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The Metabolic Syndrome A Key Cardiovascular Risk
Factor

• The share of adults with the metabolic syndrome
  has increased 5 percentage points to 31 percent
  of adults in just 5 years!
• Rates of pharmacologic treatment are rising as
  well
• Good newsmore aggressive treatment may be
  associated with the decline in CV mortality
• Bad newshigh and rising number of adults with
  the metabolic syndromewill continue to increase
  health care spending!

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Treated Prevalence Hypertension and
Hyperlipidemia
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US is more aggressive in treating asymptomatic
patients with CV risk factors
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Percent of Privately Insured Population Treated,
By Medical Condition, 1987-2002
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Why Does Real Per Capita Health Spending Rise
Over Time?

• Change in Spending
• ? Treated Prevalence ? Spending Per Case ?
  (Treated Prevalence Spending Per Case)

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How Much is Associated with Rise in Treated
Prevalence (Private Insurance)?
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Is the Higher Spending Worth It? If not what
policy options are available?

• Bad Reasons for Rising Health Care Spending Rise
  in Population Disease Prevalence
• Doubling of obesity, rising population disease
  prevalence. Doubling alone at 1987 technology
  levels accounts for 16 of the rise in spending.
  Doubling of obesity with todays technology
  accounts for 34 of the rise in spending

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Slowing the Growth in Healthcare Spending and
Managing the Level of Spending

• Need to broaden the debate to focus on rising
  population disease prevalence. Current focus on
  high deductible plans not likely to affect these
  trends, and could make matters worse for
  chronically ill patients.
• Need to better manage care provided to the
  chronically illthey acct for 80 of the spend,
  receive less than optimal care. This will require
  us to change how we pay for services. It will
  also require us to modernize our health care IT
  and delivery systemsthis will not happen absent
  major changes in how payers like Medicare pay
  providers to treat the chronically ill.

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Additional approaches for slowing the growth in
spending

• Key Issues Slow rise in treated disease
  prevalence through,
• Slowing the rise in obesity prevalence among
  children and adults.
• Need to broaden discussion of reform to include
  primary care, primary prevention. Should be a
  center piece of any cost containment effort.
• Policy Tools
• School Based Interventions (both calories and
  intervention)
• New and effective health promotion, wellness,
  disease prevention programs available for all
  adults perhaps a universal wellness and health
  promotion benefit for all
• Financial incentives to participate
• 3. Modernize our health care delivery
  system. Need modern IT infrastructure and
  integrated delivery models to address both the
  clinical and cost issues to care for the
  chronically ill

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Summary

• Changes outlined above requires fundamental
  restructuring of the US health care delivery
  system
• Attacking key drivers of rising spending which
  require a broader set of policy options.
• Need to focus on improving the care for
  chronically ill patients
• 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.