Projected Costs of Chronic Diseases

A.B. Shaw, a British physician, once noted, “Aortic valve operations on the elderly are very cost-effective if the result is death or cure instead of prolonged illness.” While this may be a bitter observation, we know that the cost of treating chronic disease quickly surpasses acute lifesaving therapies because of the duration of treatment. Seventy-six percent of Medicare spending is on patients with five or more chronic diseases.

This post, as a follow-up to Polo Black-Golde’s post last May, analyzes the projected cost of seven common diseases affecting the elderly, and thus the Medicare program. Unless otherwise noted, all Medicare figures come from the most recent spending report from the Center for Medicare and Medicaid Studies (CMS).

Alzheimer’s disease

The number of new patients diagnosed with Alzheimer’s disease is increasing, but Alzheimer’s-related mortality is decreasing. Together, these trends account for the predicted increase in the number of people living with Alzheimer’s from 5 million today to 16 million by 2050. This growth will profoundly impact Medicare costs, given that the average annual cost of a Medicare patient with Alzheimer’s is triple that of a patient without: $13,207 and $4,454, respectively.

In 2005, Medicare spent $91 billion on patients diagnosed with Alzheimer’s disease, and this amount is expected to more than double to $189 billion in 2015, and increase to over $1 trillion by 2050.

Stroke

The cost of care in the first 30 days following a stroke is only $13,019 in mild cases and $20,346 in severe cases, and yet the lifetime cost of a stroke is approximately $140,048. The bulk of those costs comes in the form of chronic care and rehabilitation.

The mortality of strokes decreased 20.7% between 1995 and 2005. Over a similar period (1995–2006) the incidence has decreased 12.8%, but this trend is expected to soon reverse itself as the population ages – particularly ethnic minority groups who are at especially high risk of stroke. The result will be an increase in spending on stroke care, from $65.6 billion in 2008 to $2.2 trillion by the year 2050 if there are no changes in treatment, preventative care, or trends of risk factors (i.e. incidence of obesity).

Diabetes

Whereas the mortality of the previous two diseases is declining, the mortality of diabetes in the general population is increasing by 1.2% annually. Coupled with an exponential growth in the diabetic population (11 million in 2000, 23.6 million in 2009), and a predicted 52.9% increase in incidence rate between 2003 and 2023, the human and economic burden of diabetes in the future is certain to be overwhelming.

Currently 10% of health care dollars are spent on overall direct costs related to diabetes, amounting to $92 billion a year (1.5 times the amount spent on stroke or heart disease). The Centers for Disease Control and Prevention predicts that spending on diabetes care will reach $192 billion in 2020.

Medicare reported spending only $1.4 billion ($7,383 per discharge) on diabetes in 2007, but this number is limited to in-patient services, which excludes most diabetic care, such as insulin therapy.

End-Stage Renal Disease

Treatment for end-stage renal disease (ESRD), often caused by diabetes or hypertension, includes hemodialysis and kidney transplantation. Overall spending on ESRD treatment increased from $8.01 billion in 1996 to $33.61 billion in 2006. Recent data predicts a 150% increase in the number of patients undergoing hemodialysis and kidney transplantation in the next decade, which will continue the upward trend in treatment costs.

Medicare alone spent $23 billion on ESRD related hospitalizations in 2006, an average 9.2% annual increase from 1992.

Chronic Lung Disease

The Centers for Disease Control and Prevention lists fourth leading cause of death in the adult population as chronic lower respiratory disease, which includes bronchitis, emphysema, COPD, and asthma. The mortality of chronic lung disease is predicted to decrease at a rate of 1.5% a year until 2030, and yet the cost of treating it is predicted to more than double from $176.8 billion in 2006 to $389.2 billion in 2011 and to reach $832.9 billion in 2021. The reason for this skyrocketing increase is a 31.1% increase in the number of diagnoses predicted by the Milken Institute.

Medicare spent over $8 billion on respiratory disease, excluding pneumonia, in 2006, a figure that is bound to increase tremendously in the next decade.

Heart Disease

Heart disease has long been the leading cause of death in the United States. However, for the last 60 years, the age-adjusted mortality rate heart disease has been in decline. From 1950 to the mid-1980s, heart disease accounted for roughly 40% of all mortality; since 1986 this has slowly decreased. The most recent data from the CDC show that in 2005 heart disease accounted for 27.1 percent of overall mortality in the U.S, at an age-adjusted rate of 222 deaths per 100,000.

In contrast to the decreasing mortality rate from heart disease, expenditures are on the rise. In 2007, the overall cost of direct care for heart disease was $164.9 billion and is estimated to have been $183 billion in 2009. As the use of expensive treatments for heart disease such as pacemakers and internal defibrillators, continues to increase, so too will the cost of care. According to the Milken institute, overall cost of heart disease is predicted to reach $186 billion in 2023. In 2006, Medicare spent $24 billion on heart disease.

Cancer

The CDC reports that overall spending on direct care for cancer totaled $74 billion in 2004. While there are not any reliable cost projections for cancer, there has recently been an exponential increase in the cost of cancer drugs. Cancer treatment is especially prone to spending an exorbitant amount of money on a marginal benefit, with some treatments, such as Avastin – used for metastatic breast, colon, and non-small cell lung cancer – costing over $90,000 for a 1.5-month increase in predicted survival time, or $2,000 per day.

Medicare spent $7.3 billion dollars on inpatient cancer care, but this does not include most chemotherapy, which is administered as an outpatient service and is covered under Part B. Medicare spending on Part B drugs in 2004 totaled $10.87 billion, representing a steady 25% annual increase from the $2.76 billion spent in 1997. Given that the incidence of cancer in people above age 65 is nearly 10 times that of people under 65, as the population ages Medicare is bound to pay a large and growing portion of the nation’s over all spending on cancer treatments.

Considering that chronic diseases account for such a great proportion of Medicare’s overall spending, any increases in chronic care spending will directly affect Medicare. Ideally, Medicare spending will not increase annually more than the rate of inflation, 2 to 3%. However, each of these seven diseases explicitly underscores the fact that current trends make that goal almost impossible.

Kimberly Swartz is an intern at The Hastings Center.

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11 Trackbacks

  1. […] This post was mentioned on Twitter by Hastings Center, Kimi Swartz. Kimi Swartz said: RT @hastingscenter: HealthCareCostMontr: Projected Costs of Chronic Diseases: A.B. Shaw, a British physician, once noted, “Aortic val… http://​bit​.ly/​5​u​J​AnS […]

  2. […] although there was barely a mention of one of the main drivers of those costs: chronic diseases. Seventy-six percent of Medicare spending is on patients with five or more chronic diseases, including heart disease, […]

  3. […] Seventy-six percent of Medicare spending is on patients with five or more chronic diseases […]

  4. […] is not such a bad idea, as inefficient care for patients with multiple chronic conditions is the single biggest driver of health care costs in the US. The overall cost that it takes to care for each patient is […]

  5. […] In the next few years, the cost of treating Alzheimer’s disease is expected to skyrocket. In 2005, Medicare spent $91 billion on the care and treatment of Alzheimer’s patients. By 2015, the […]

  6. By Disease costs | Chavascondesa on April 2, 2012 at 1:24 am

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