The Growth in Cost per Case Explains Far More of US Health Spending Increases Than Rising Disease Prevalence

Study Questions:

Does cost per case impact overall US health care spending?


Prevalence of treated cases and clinical prevalence were examined as cost per case was estimated across various medical conditions (treated or not) from 1996 to 2006. Adjusted spending estimates from the federal National Health Expenditure Accounts by type of service were used to create categories that were comparable to available sources of information on spending by medical condition. Then estimates of the spending within each service category that was attributable to each population segment (civilian noninstitutionalized population, population in nursing homes, or other) were created. Last, expenditures were distributed across medical conditions for each population segment and service category. Data from the Medical Expenditure Panel Survey (including civilian noninstitutionalized patients), which surveys this population, were used to distribute spending across medical conditions. The distribution of spending by condition was made using the Clinical Classification System software developed by the Agency for Healthcare Research and Quality, which maps detailed diseases onto an all-inclusive set of 260 medical conditions. These treated-prevalence estimates were used to determine how much of the change in real per capita spending for each condition was attributable to the change in treated prevalence and to the change in cost per case.


After adjustment for inflation and population growth, the growth rate in real per capita spending across the full set of medical conditions was 3.8% between 1996 and 2006. Estimated changes in treated prevalence accounted for about one percentage point of the spending growth, while changes in cost per case accounted for 2.9 percentage points. Spending growth rates exceeded gross domestic product growth for all but one of the 15 broad diagnosis code categories. Real per capita growth rates were highest for esophageal disorders (19.5%) and hyperlipidemia (14.0%), with increased treated prevalence as the primary driver. Spending growth rates were lowest for cerebrovascular disease (−1.7%) and pneumonia (−1.5%), with each of those conditions showing reduced treated prevalence. Increases in the treated prevalence were the major contributor to spending growth, because the percentage increase in treated prevalence was larger than for clinical prevalence. The top five conditions were characterized by a very high share of spending on prescription drugs, ranging from 87% for hyperlipidemia to 47% for anxiety and depression. There has been an increase in treated prevalence as a result of new drugs and associated changes in diagnosis and treatment patterns.


The authors concluded that most of the treated-prevalence effect is due to an increase in the share of eligible people being treated, rather than an increase in clinical prevalence of diseases. Over the time period examined, three-fourths of the increase in real per capita health spending was attributable to increases in cost per case. Treated prevalence accounted for about one-fourth of spending growth.


Analyses such as this allow for an in-depth examination of health care costs. Increases in the number of treated patients, particularly if appropriate in terms of prevention, may result in reductions in costs related to prevention of events related to uncontrolled cardiovascular disease risk factors. We need to ask ourselves how much we will be willing to spend to prevent serious cardiovascular events, and who should shoulder the burden in terms of cost.

Clinical Topics: Dyslipidemia, Vascular Medicine

Keywords: Depression, Depressive Disorder, Pneumonia, Hyperlipidemias, Costs and Cost Analysis, Health Care Costs, Cerebrovascular Disorders, United States Agency for Healthcare Research and Quality, Cardiology, Cardiovascular Diseases, United States

< Back to Listings