During this 15-year period health-care spending increased at an average annual rate of 7.5% per year (in nominal dollars) and 5.1% per year when adjusting for inflation (using the GDP deflator). However, during the past three years, the cost of health insurance has increased by an average of 12.5% per year, according to Health Affairs’ report Which Medical Conditions Account for the Rise in Health Care Spending?
Among the noninstitionalized population, nominal health-care spending increased by $314 billion – 5.5% per year – between 1987 and 2000. After inflation was accounted for using the GDP deflator, total spending increased by $199 billion – about 3% per year.
Health Affairs attributes the bulk of the increase to the 15 most expensive medical conditions in 1987 and 2000, a figure the policy organization places between 43% and 61% of the total nominal change. In fact, the study found the top five medical conditions –heart disease, mental disorders, pulmonary disorders, cancer, and trauma – accounted for 31% of all health-care spending. For four of the conditions, a rise in treated prevalence, rather than rising treatment costs per case or population growth, accounted for most of the spending growth.
Examining what has fueled this growth, Health Affairs said in eight of the top 15 conditions, a rise in the cost per treated case, not rising numbers of cases treated, accounted for most of the growth in spending. For example, the treated prevalence of heart disease remained constant between 1987 and 2000. Thus, a rise in the cost per treated heart disease case accounted for nearly 70% of the rise in medical care spending between 1987 and 2000, Health Affairs said.
Additionally, Health Affairs attributed a portion of the spending to population growth. For the top 15 conditions, population growth accounted for about 19% to 35% of the increase.
A copy of the full report is available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.437 .