The Remington Report

The causes of Medicare spending growth have changed significantly over the past two decades, according to an article published by Health Affairs. Twenty years ago, most of the increases were due to inpatient hospital services, especially for heart disease, but recent annual increases are the result of outpatient treatment of chronic conditions such as diabetes, arthritis, hypertension, and kidney disease.

This study based on findings by Kenneth E. Thorpe, Lydia L. Ogden, and Katya Galactionova, published in the article “Chronic Conditions Account For Rise In Medicare Spending From 1987 To 2006 analyzed data about disease prevalence and about level of and change in spending on the ten most expensive conditions in the Medicare population from 1987, 1997, and 2006. Among the key findings: heart disease ranked first in terms of share of growth from 1987 to 1997. However, from 1997 to 2006, heart disease fell to tenth, while other medical conditions – diabetes the most prevalent – accounted for a significant portion of the rise. The authors suggest that increased spending on diabetes and some other conditions results from rising incidence of these diseases, not increased screening and diagnoses: “The changing mix of medical conditions driving the rise in Medicare spending had consequential effects. More than half of the beneficiaries are treated for five or more chronic conditions each year. System fragmentation means that chronically ill patients receive episodic care from multiple providers who rarely coordinate the care they deliver, and chronic disease management programs are notably absent in traditional fee-for-service Medicare. As Congress, the administration, providers, insurers, and consumers debate reshaping the U.S. health system, they must address these changed health needs through evidence-based preventive care.”