Higher costs related to rising prevalence of chronic disease
The Rising Prevalence Of Treated Disease
Effects On Private Health Insurance Spending To contain spending, the U.S. health care system needs to address rising rates of treated disease instead of requiring higher cost sharing from consumers
By Kenneth E. Thorpe, Curtis S. Florence, David H. Howard, Peter Joski
Health Affairs
June 27, 2005
Abstract:
In this paper we present a new framework for understanding the factors driving the growth in private health insurance spending. Our analysis estimates how much of the rise in spending is attributable to a rise in treated disease prevalence and spending per treated case. Our results reveal that the rise in treated disease prevalence, rather than the rise in spending per treated case, was the most important determinant of the growth in private insurance spending between 1987 and 2002. A rise in population risk factors and the introduction of new technologies underlie these trends.
From the Discussion:
Much of the current cost containment debate has ignored the role of the rise in treated disease prevalence in driving the growth in private health care spending. Efforts by major health plans and larger employers to slow the growth in spending have focused on increasing consumer cost sharing, negotiating discounts with providers, and managing chronic illnesses better. These are largely approaches designed to control the cost per treated case. On the other hand, these interventions do little to control the growth in treated disease prevalence—the leading cause of the rise in private insurance spending. Other analysts have suggested that higher copayments and deductibles and broader use of medical savings accounts will slow the growth in health care spending. Although these approaches may prove useful, they also appear mismatched with respect to the key driver of private health care spending: the rise in treated disease prevalence.
Other aspects of the health care debate have focused on “value”—whether the additional spending for treating diabetes, heart attacks, and depression among other conditions yields substantial improvements in health. Outcomes have improved for many of these conditions, which suggests that the additional spending is worth it. Yet as our analysis indicates, the main driver of higher spending is not a rise in the cost per treated case, but rather the rise in the number of cases treated. As a result, efforts to slow the growth in private insurance spending must target the population risk factors along with other factors that have led to the rise in treated disease prevalence.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.317
Comment: This study is receiving considerable media attention because of its conclusion that obesity has significantly increased the costs of health care in the United States. This message is certainly important although, from a policy perspective, we need to be concerned about the implications of this study for controlling costs and improving population health.
It is often stated that the most important cause of higher health care costs is the greater use of technology. This study confirms that greater application of technology does add significantly to health care costs, but an even greater factor is the increase in chronic disease prevalence, especially obesity and associated disorders such as hypertension, hyperlipidemia and diabetes. What is the significance of this from a policy perspective?
One of the more important considerations is that efforts to control health care costs by increasing out-of-pocket spending may not produce the desired effect of obtaining greater value. Chronic disease interventions that are effective should be encouraged, whereas consumer-directed cost sharing would reduce utilization of these beneficial services.
Some argue that cost sharing causes people to take better care of themselves - through a healthier diet and more exercise - in order to avoid future out-of-pocket expenses that might result from neglected attention to healthy habits. It defies logic to suggest that the risk of increased out-of-pocket spending at some vague point in the future serves as a greater motivator of following a healthy life style than the more obvious motivator of simply not wanting to be fat and sick.
Another consideration is that interventions are now commonly based on studies that demonstrate statistical significance in large population groups, but when applied to a single patient, the probability that the outcome would improve may be very, very small. As an example, a statistically significant study might show that an intervention reduces the incidence of adverse outcomes from 37% of the population group down to 35%. Such a result would provide the rationale for long-term treatment, but then patients might not elect to embark on a life-long treatment program if they were told that they have a 97% or 98% probability of receiving no benefit beyond the anticipated potential outcome without the intervention. More attention needs to be given to distinguishing policies that benefit populations as opposed to those that clearly benefit the individual.
Perhaps the most important policy consideration is how best to apply preventive measures to avoid the high costs of treating chronic diseases.
It’s obvious that effective preventive interventions must first be identified. Everyone knows that good nutrition and exercise are important, yet this study indicates that the prevalence of disorders related to poor diets and inadequate exercise are increasing. Platitudes from providers are not adequate. Our health care delivery system is better suited to intervene after problems become manifest, whereas maintaining a healthy population through prevention is more suited to a strong public health program. We need more applied research that would result in behavior in which an apple would be consumed in place of a Twinkie.
Public policies such as instruction and food accessibility in the school systems, tax and regulatory policies influencing the food industry, community design to entice more to exercise, and other such measures would certainly be more effective than being scolded for making bad choices.
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