Decomposing growth in spending finds annual cost of treatment contributed most to spending growth, 1980-2006

Health Affairs

Volumn 34, Issue 5, 2014, Pages 823-831

  Starr, Martha ^a   Dominiak, Laura ^b   Aizcorbe, Ana ^c  

^a AMERICAN UNIVERSITY   (United States)

^b FEDERAL RESERVE BOARD   (United States)

^c VIRGINIA BIOINFORMATICS INSTITUTE   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ADULT; AGED; ARTICLE; CHRONIC DISEASE; CONTROLLED STUDY; DECOMPOSITION; GROWTH CURVE; HEALTH CARE; HEALTH CARE COST; HEALTH CARE POLICY; HEALTH SURVEY; HEART FAILURE; HEART INFARCTION; HOUSEHOLD; HUMAN; HYPERTENSION; MAJOR CLINICAL STUDY; MEDICAL INFORMATION; POPULATION GROUP; POPULATION GROWTH; PREVALENCE; PRIVATE HEALTH INSURANCE; PUBLIC HEALTH INSURANCE; RISK REDUCTION; ADOLESCENT; COST OF ILLNESS; ECONOMICS; FEMALE; MALE; MIDDLE AGED; TRENDS; UNITED STATES; YOUNG ADULT;

ADOLESCENT; ADULT; AGED; CHRONIC DISEASE; COST OF ILLNESS; FEMALE; HEALTH CARE COSTS; HEALTH EXPENDITURES; HUMANS; MALE; MIDDLE AGED; POPULATION GROWTH; UNITED STATES; YOUNG ADULT;

EID: 84899783925     PISSN: 02782715     EISSN: 15445208     Source Type: Journal    
DOI: 10.1377/hlthaff.2013.0656     Document Type: Article

References (25)

1. Centers for Medicare and Medicaid Services. National health expenditure data, historical data, table 1 [Internet]. Baltimore (MD): CMS; [cited 2014 Mar 14]. Available from: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/tables.pdf
2. For a recent review, including references, see Chernew ME, Newhouse JP. Health care spending growth. In: Pauly MV, McGuire TG, Barros PP, editors. Handbook of health economics. Volume 2. Amsterdam: North Holland; 2012. p. 1-43.
3. Thorpe KE, Ogden L, Galactionova K. Chronic conditions account for rise in Medicare spending from 1987 to 2006. Health Aff (Millwood). 2010;29(4):718-24.
4. Thorpe KE, Florence CS, Howard DH, Joski P. The rising prevalence of treated disease: effects on private health insurance spending. Health Aff (Millwood). 2005;24:w5-317-25. DOI: 10.1377/hlthaff.w5.317.
5. Thorpe KE. Treated disease prevalence and spending per treated case drove most of the growth in health care spending in 1987-2009. Health Aff (Millwood). 2013;32(5):851-8.
6. Roehrig CS, Rousseau DM. The growth in cost per case explains far more of US health spending increases than rising disease prevalence. Health Aff (Millwood). 2011;30(9):1657-63.
7. The management of chronic conditions is a central feature of current payment reforms, including accountable care organizations. McClellan M, McKethan AN, Lewis JL, Roski J, Fisher ES. A national strategy to put accountable care into practice. Health Aff (Millwood). 2010;29(5):982-90.
8. Nelson L. Lessons from Medicare's demonstration projects on disease management and care coordination [Internet]. Washington (DC): Congressional Budget Office; 2012 Jan [cited 2014 Mar 10). (Working Paper No. 2012-01). Available from: http://www.cbo.gov/sites/default/files/cbofiles/attachments/WP2012-01_Nelson_Medicare_DMCC_Demonstrations.pdf
9. Bundorf MK, Royalty A, Baker LC. Health care cost growth among the privately insured. Health Aff (Millwood). 2009;28(5):1294-304.
10. Dunn A, Liebman E, Shapiro AH. Decomposing medical-care expenditure growth [Internet]. San Francisco (CA): Federal Reserve Bank of San Francisco; 2012 Nov [cited 2014 Mar 10]. (Working Paper No. 2012-26). Available from: http://www.frbsf.org/publications/economics/papers/2012/wp12-26bk.pdf
11. To access the Appendix, click on the Appendix link in the box to the right of the article online.
12. Previous work suggests that differential attrition of high-cost cases may account for one-third to onehalf of the apparent understatement of aggregate health care spending in MEPS relative to the National Health Expenditure Accounts. Zuvekas SH, Olin GL. Accuracy of Medicare expenditures in the Medical Expenditure Panel Survey. Inquiry. 2009;46(1):92-108.
13. Aizcorbe A, Liebman E, Pack S, Cutler DM, Chernew ME, Rosen AB. Measuring health care costs of individuals with employer-sponsored health insurance in the US: a comparison of survey and claims data. Statistical Journal of the International Association for Official Statistics. 2012;28(1-2):43-51.
14. Sing M, Banthin JS, Selden TM, Cowan CA, Keehan SP. Reconciling medical expenditure estimates from the MEPS and NHEA, 2002. Health Care Financ Rev. 2006;28(1):25-40.
15. Authors' computations from Table 1 of the National Health Expenditure Accounts historical data cited in Note 1.
16. Authors' computations from Table 2 of the National Health Expenditure Accounts historical data cited in Note 1. (Table 2 is available for download from the same web address as shown for Table 1 in Note 1.)
17. The share of adults ages sixty-five and older rose from 10.6 percent in 1980 to 12.6 percent in 1997 and 12.7 percent in 2006.
18. Abe Dunn and coauthors reported a similar finding (see Note 10).
19. For a discussion, see Zhang Y, Soumerai SB. Do newer prescription drugs pay for themselves? A reassessment of the evidence. Health Aff (Millwood). 2007;26(3):880-6.
20. Aizcorbe A, Nestoriak N. Changing mix of medical care services: stylized facts and implications for price indexes. J Health Econ. 2011;30(3):568-74.
21. To access the Appendix to Thorpe's article in Note 5, click on the Appendix link in the box to the right of the Thorpe article online (see Note 5).
22. Including population growth in prevalence increases both the numerator (extra spending because greater numbers of people are treated) and the denominator (because of both greater numbers of people being treated and extra spending resulting from increased cost per case and cross terms).
23. For a consideration of the role of quality improvements in rising spending, see Eggleston KN, Shah ND, Smith SA, Berndt ER, Newhouse JP. Quality adjustment for health care spending on chronic disease: evidence from diabetes treatment, 1999-2009. Am Econ Rev. 2011;101(3):206-11.
24. Aizcorbe AM. A practical guide to price index and hedonic techniques. Oxford: Oxford University Press. Forthcoming.
25. See, for example, Cutler DM, McClellan M, Newhouse JP, Remler D. Are medical prices declining? Evidence from heart attack treatments. Q J Econ. 1998;113(4):991-1024.