Skip to main content

Sources of Medicare Spending Growth

By February 24, 2010Commentary

There are many ways to slice and dice health spending in an attempt to understand its drivers.  In a recently published study, researchers examined Medicare spending over two decades for trends in conditions treated and source of care.  (Health Affairs Study) They focused on changes in disease prevalence, spending by disease and treatment locations, relying on the Medicare beneficiary subset of the AHRQ household surveys on medical spending.  Increases in reported disease prevalence may reflect true rises in incidence or may be a result of better reporting, better diagnoses, or lowered thresholds for what is considered a disease state needing treatment.

The top-ten medical conditions accounted for about half of total Medicare spending growth in the two decade study period.  Treatment prevalence stayed about the same for some, such as heart disease and osteoarthritis, but rose significantly for others, such as hyperlipidemia, hypertension and diabetes.   Heart disease accounted for substantial spending growth in the first decade, but for a small portion of the growth in the second decade.  On the other hand, conditions such as hypertension and diabetes were responsible for much of the spending growth in that second decade.

In the second decade, there was a noticeable shift in where the spending growth went, from hospital inpatient to outpatient services and prescription drugs.  This is consistent with the example of heart disease, where use of statins and other drugs has reduced or delayed heart attack incidence and hospitalizations, but obviously physician monitoring visits and drug costs are up.  A similar pattern might be observed with other diseases, particularly where use of pharmaceuticals may reduce the need for acute hospitalizations.

The researchers conclude that as Medicare spending becomes more driven by these chronic conditions, with many beneficiaries having more than one and being seen by multiple providers, it is even more critical that better coordination and management of care be implemented for these beneficiaries.

Leave a comment