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November 9, 2017

The 5 reasons why health spending is up $1 trillion

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    U.S. health care spending rose from $1.2 trillion in 1996 to $2.1 trillion in 2013 after adjusting for inflation, and about half of the rise was due to changes in health care service price and intensity, according to a study published Tuesday in JAMA.

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    Study details

    For the study, researchers from the University of Washington's Institute for Health Metrics and Evaluation and University of California–Los Angeles' David Geffen School of Medicine examined the association between U.S. health care spending growth from 1996 to 2013 and five factors:

    • Disease prevalence or incidence;
    • Population aging;
    • Population growth;
    • Service price and intensity; and
    • Service utilization.

    The researchers reviewed data from Institute for Health Metrics and Evaluation's US Disease Expenditure 2013 project and a Global Burden of Disease 2015 study. The data included 155 health conditions, 36 age and sex groups, and six types of care, including dental and inpatient care.


    According to the study, after adjusting for inflation, annual U.S. health care spending between 1996 and 2013 rose by a total of $933.5 billion for:

    • Ambulatory care;
    • Dental care;
    • Emergency department use;
    • Inpatient care;
    • Nursing facilities, and
    • Retail pharmaceuticals.

    Of the $933.5 billion spending increase, the researchers found:

    • Changes in service prices and intensity accounted for 50%—or an estimated $583.5 billion—of the spending increase;
    • Population aging accounted for a 11.6%—or an estimated $135.7 billion— of the spending increase; and
    • Population growth accounted for a 23.1%—or an estimated $269.5 billion—of the spending increase.

    The researchers determined service use was not linked to a statistically significant change in spending, while changes in disease prevalence or incidence accounted for 2.4% percent—or an estimated $28.2 billion—decrease in spending.

    According to the study, the effects of these five factors varied across health conditions and type of care. For instance, the researchers noted that "service utilization was associated with increases in spending on ambulatory care and retail pharmaceuticals but with reductions in spending on inpatient care."

    The researchers said, "The association of disease incidence and prevalence with spending growth was minor overall but varied by condition." For instance, the researchers found an association between the rising prevalence of diabetes and health care spending growth for this particular condition, but they also found an association between the reduced prevalence of cardiovascular diseases and decreased health care spending for those conditions.

    But overall, the researchers wrote, "Increases in service price and intensity had the strongest associations with the total spending increase." They concluded, "Understanding these factors and their variability across health conditions and types of care may inform policy efforts to contain health care spending" (Baker, "Vitals," Axios, 11/8; Paavola, Becker's Hospital CFO Report, 11/7; Wilson, MedPage Today, 11/7; Dieleman et al., JAMA, 11/7).

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