The alarming rate at which health care costs are rising
is a worldwide problem. However, costs are spread extremely
unevenly across the population, reveals a new study based on US
data, which points to chronic diseases related to the dramatic rise
in obesity levels as major driver of rising health care
costs.
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When statistics about the cost of health care are
discussed, the focus is almost invariably on areas such as the
overall spending trend, costs per capita and spending in the
various segments of the health industry. But data covering which
consumers actually represent the biggest cost to health insurers
and state health schemes is seldom seen.
This shortcoming has been remedied
by a study published by the US National Institute for Health Care
Management (NIHCM). While the findings of the study are limited to
the US, in broad terms they are, in all probability, applicable in
varying degrees in many other developed economies.
It comes as no surprise that the
NIHCM’s findings reveal that allocation of the US annual health
care bill of over $2.5trn is not evenly spread across the
population. However, what is of surprise is the huge variation in
health care costs incurred across the population.
For its study, the NIHCM used data
from the 2008 US Department of Health and Human Service’s Medical
Expenditure Panel Survey (MEPS) of the civilian
non-institutionalised population (CNIP). The CNIP consists of
persons 16 years and older who are not inmates of institutions (for
example, prisons and homes for the aged) and who are not on active
duty in the armed forces.
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By GlobalData
Skewed to the big
spenders
In its study the NIHCM found the
vast amount of health care spending in the CNIP segment is
concentrated in a very small group. Specifically, 63.6% of all
spending was incurred by the 10% of the CNIP with the highest
spending.
In an exponential rise is spending,
the top 5% of the CNIP accounted for 47.5% of all spending, and the
top 1% of the CNIP was responsible for 20.2% of spending. The mean
spending of the top 1% was a massive $76,476 per person.
At the other end of the spending
scale, 15.6% of the CNIP incurred no health care costs at all in
2008, while the half of the population with the lowest spending
accounted for a mere 3.1% of all expenditure. The mean spending of
the lower half of spenders was a mere $233.
As would be expected older people
make up a much larger proportion of the high spending groups, while
those in the lower spending groups tend to be younger, on average.
For example, among the top 1% of spenders, 65.1% were aged 55 or
over in 2008.
Obesity makes itself
felt
The NIHCM noted that, while the
highly skewed distribution of spending has been very persistent
over time, the proportion of expenditure accounted for by the
highest spending groups has declined to an extent over the past two
decades.
For example, spending by the top 5%
of spenders declined from 56% of total spending in 1987 to 48% in
2008.
On this change, the NIHCM says:
“This flattening of the spending distribution is consistent with
the well-documented increase in population risk factors – most
notably, obesity – and a concomitant increase in treated disease
prevalence for chronic conditions that are clinically linked to
these risk factors, such as hypertension, diabetes and
hyperlipidemia [high cholesterol levels].”
According to the MEPS, more than
34% of adults in the US were obese in 2008 with medical costs
related to obesity in that year totalling $147bn.
The NIHCM emphasises that chronic
conditions are also a likely reason why some people have high
spending over an extended period, particularly when multiple
chronic conditions are present.
According to the Agency for
Healthcare Research and Quality, more than a quarter of all
Americans – and two out of three older Americans – have multiple
chronic conditions and treatment for these individuals accounts for
two thirds of the country’s health care spending.
Big spenders stay big
spenders
Continuing its observations on the
ongoing impact of chronic diseases, the NIHCM notes that 18% of
people who were in the top 1% spending category in 2007 remained in
the top-spending category in 2008.
For the top 5% and top 10% spending
categories, the comparable retention figures were 31% and 43%,
respectively. Among those in the top 30% of spending there was a
nearly two-thirds retention from 2007 to 2008.
Providing a parallel with the US,
the UK’s Department of Health (DoH) notes the latest Health Survey
for England data show nearly one in four adults, and over 1 in 10
children aged 2 to 10, are obese. Extrapolating the trend, by 2050,
60% of men, 50% of women and 25% of children in the UK will be
obese if no action is taken.
According to the DoH, the annual
direct cost only of obesity to the country’s National Health
Service is currently £4.2bn ($6.65bn).
Summing up its findings, the NIHCM
identifies the two key drivers of rising health care costs in the
US.
The first is technological change.
The second is the increasing burden from chronic diseases,
particularly those related to burgeoning obesity rates.
“Until we are successful in tackling the key underlying causes
of medical spending inflation, we will continue to face rising
private health care premiums and rising national spending for
health care,” the NIHCM concludes.
