The Role of Chronic Disease, Obesity, and Improved Treatment and Detection in Accounting for the Rise in Healthcare Spending Between 1987 and 2011

Abstract

To curb rising healthcare expenditures in the U.S.A., the factors underlying this growth must be well understood. We aim to explore how chronic disease prevalence, obesity, and improved disease detection and treatment rates contributed to the growth in health spending in the U.S.A. between 1987 and 2011. We use spending decomposition equations to estimate the portion of spending growth attributable to prevalence increases, rising treatment costs, and population growth, respectively. We use two-part models to estimate the portion of prevalence-related spending that is potentially due to obesity. We examine changing diagnosis and treatment rates to assess how much of the growth in spending might be desirable. We find that the share of total healthcare spending associated with the treatment of chronic disease has risen dramatically from 1987-2011. In particular, we estimate that 77.6% of healthcare spending growth is attributable to patients with four or more chronic conditions. We find that rising obesity levels may explain between 11.4 and 23.5% of the increase in healthcare expenditure for several specific chronic conditions. Diagnosis and treatment rates for chronic disease are improving. Individuals with multiple chronic conditions are disproportionately responsible for rising healthcare expenditure. Much of spending growth associated with rising rates of chronic disease can be linked to rising obesity rates. Though much of the growth in spending is generally considered undesirable, disease detection and treatment rates are also rising, suggesting that at least some of the recent growth in healthcare expenditure may be beneficial.