Rising treatment costs the biggest drivers of health care spending

May 5, 2014 by Tiffany L Trent, Virginia Tech

(Medical Xpress)—It's a well-known fact that spending on health care has consistently grown faster than the rest of the U.S. economy.

What's behind this trend is less certain. Economists point to two causes: the prevalence of diseases and conditions afflicting the U.S. population, or the rising costs of treating diseases. New research from American University associate professor Martha Starr and Ana Aizcorbe, a research professor with the Virginia Bioinformatics Institute at Virginia Tech, shows it is the latter, with higher prices for treatment accounting for 70 percent of growth in health care .

"Rising costs of treatment have had a much greater impact on driving up average spending than increased disease prevalence," Starr said. "To tackle the problem of health care spending from a policy perspective, solutions need to focus on slowing growth of spending on procedures, treatments, and drugs used to treat given diseases and conditions. Of course, slowing or reversing the rise of would be beneficial for the health and well-being of the U.S. population, but by itself it won't put much of a dent in health care spending growth."

The research findings appear in the journal Health Affairs.

The researchers examined data from four nationally representative surveys from 1980 to 2006. They analyzed how shares of the U.S. population afflicted with different diseases and conditions and the costs and services used to treat them contributed to growth in average spending on health care, adjusting for inflation.

"In contrast to earlier studies on health care spending, we analyzed data that covered a longer time period and the full range of health care cases," Aizcorbe said.

Over the whole period, rising disease prevalence boosted spending by 0.5 percentage point per year compared to a contribution of 2.5 percentage points from rising cost per case, the researchers found.

Costs of treatment have increased due to both rising prices of and more intensive use of services to treat diseases. Robust growth in cost per case occurred for musculoskeletal conditions and circulatory and respiratory disorders.

Particularly hefty growth was associated with rising average costs of routine care, which more than doubled over the period to $602 per person per year in 2006.

Increased cases of chronic conditions such as diabetes, heart conditions, high cholesterol, and mental disorders boosted health care spending as well, but in a much more modest way.

When examining rising , economists look at population aging and shifts in insurance coverage. Starr and Aizcorbe found these played minor roles over the 26-year period.

And even though rising from 1997 to 2006 stood out, it still accounted for only one-third of average spending growth.

The researchers also noted that had there not been a steady shift away from the use of hospital services, the rate of spending growth would have been well above 3.5 percent per year.

Finally, the researchers warn that even while shifts from hospital-based care to office-based care and prescription medicines for diseases and conditions may lower , intensified use of these services and the use of more expensive items, such as brand-name instead of generic medications, risk driving up costs.

Traditionally, health-care delivery systems have focused on treating the sick and injured, rather than keeping people well. Recent innovations in delivery emphasize 'population health management'—that is, trying to promote population health by making sure people get preventive care, increasing monitoring of patients with chronic , and increasing follow-up with patients in poor health, among other methods.

"Going forward it will be important to make sure intensified efforts to promote preventive care do eventually work to slow growth in spending on acute care," Starr said.. "This could be tricky to study though, because benefits of greater prevention will take time to materialize and could be hard to trace through in the data."

Explore further: Increase in medical treatment caused greatest increase in US health care costs

Related Stories

Increase in medical treatment caused greatest increase in US health care costs

May 6, 2013
The increasing proportion of the population that received treatment for a specific medical condition – called "treated disease prevalence"—along with higher spending per treated case accounted for most of the rise in ...

Despite recession, children's health spending increased between 2009-2012, says new report

February 27, 2014
Spending on health care for children covered by employer-sponsored insurance (ESI) increased between 2009 and 2012, rising an average 5.5 percent a year, with more dollars spent on boys than girls, and higher spending on ...

Health care agency passes $1 trillion milestone

March 4, 2014
The government's biggest health care agency is passing the $1 trillion mark in President Barack Obama's new budget, a milestone for the Department of Health and Human Services.

U.S. health spending rising modestly, report finds

January 7, 2014
(HealthDay)—Even as consumers dig deeper to pay for health expenses, overall health-care spending in the United States continues to expand at a relatively low rate of growth, a new government analysis shows.

New study examines disparities in Medicaid spending on children in the welfare system

April 23, 2014
(Medical Xpress)—In the new health-care climate of the federal Affordable Care Act and efforts to expand Medicaid to accommodate more individuals and children, the need to closely examine ways to best use government funding ...

New quality, payment initiative positively impacts pediatric care

December 23, 2013
Within two years of implementation, Blue Cross Blue Shield of Massachusetts' Alternative Quality Contract (AQC) had a small but significant positive effect on the quality of pediatric care, according to a new study from Boston ...

Recommended for you

Women run faster after taking newly developed supplement, study finds

January 19, 2018
A new study found that women who took a specially prepared blend of minerals and nutrients for a month saw their 3-mile run times drop by almost a minute.

Americans are getting more sleep

January 19, 2018
Although more than one in three Americans still don't get enough sleep, a new analysis shows first signs of success in the fight for more shut eye. According to data from 181,335 respondents aged 15 and older who participated ...

Wine is good for you—to a point

January 18, 2018
The Mediterranean diet has become synonymous with healthy eating, but there's one thing in it that stands out: It's cool to drink wine.

Sleep better, lose weight?

January 17, 2018
(HealthDay)—Sleeplessness could cost you when it's time to stand on your bathroom scale, a new British study suggests.

Who uses phone apps to track sleep habits? Mostly the healthy and wealthy in US

January 16, 2018
The profile of most Americans who use popular mobile phone apps that track sleep habits is that they are relatively affluent, claim to eat well, and say they are in good health, even if some of them tend to smoke.

Improvements in mortality rates are slowed by rise in obesity in the United States

January 15, 2018
With countless medical advances and efforts to curb smoking, one might expect that life expectancy in the United States would improve. Yet according to recent studies, there's been a reduction in the rate of improvement in ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.