Chronic Conditions Consume Half of Health Care Spending

December 16, 2002
Some 60 million people with chronic conditions are living with multiple chronic conditions representing more than half of all health care spending, according to a new chartbook released by Partnership for Solutions of the Johns Hopkins University.

The chartbook, Chronic Conditions: Making the Case for Ongoing Care, estimates that today there are 125 million people with chronic conditions and that by 2020 157 million people are expected to have a chronic condition. The report also finds that there are 20 million more Americans than projected who have at least one chronic condition. The original projections were published in a 1996 chartbook, Chronic Care in America: A 21st Century Challenge.

“Trends in chronic conditions are important because people with multiple chronic conditions are the heaviest users of health care services and need a health system different from what is generally available today,” said Gerard Anderson, PhD, national program director of Partnership for Solutions.

“People with multiple chronic conditions represent every segment of our society and we estimate that 81 million people (more than one quarter of the population) will be living with multiple chronic conditions by the year 2020.”

The chartbook also details spending and utilization, outlines the obstacles to providing and obtaining optimal care and the ways the current health care system does not meet the needs of this burgeoning population. Some of the findings related to the prevalence, health care expenditures and hospitalization rates of older Americans with multiple chronic conditions were recently published in the November 11th issue of Archives of Internal Medicine.

A chronic condition is defined as conditions that last a year or longer, limit what one can do, and/or may require ongoing medical care. Having multiple chronic conditions also increases the risk of activity limitations (such as difficulty walking, inability to work and difficulty with personal care such as eating and bathing). The most common chronic condition in adults is hypertension; in children the most common are respiratory diseases and asthma.

As a group, people with multiple chronic conditions have significantly more physician contact and are more likely to be hospitalized each year than those with only one chronic condition. In the general population, people with five or more chronic conditions have an average of almost 15 physician visits and fill almost 50 prescriptions per year. People with only one chronic condition, on average, see about three different physicians and fill six prescriptions per year.

As the number of chronic conditions a person has increases, so do the out-of-pocket costs.

Individuals with chronic conditions pay five times more out-of-pocket than individuals without chronic conditions – regardless of the type of insurance they have. Of those with insurance coverage, Medicare beneficiaries typically pay the most out-of-pocket because Medicare does not cover all needed services and, as a group, they tend to have more chronic conditions.

It’s not just the out-of-pocket expenses that are costly. The chartbook also found three quarters of spending is on behalf of people with chronic conditions. Individuals with chronic conditions account for 88 percent of all prescriptions filled and 72 percent of all physician visits.

“Health care spending increases significantly when people have multiple chronic conditions,” said Jane Horvath, MHSA, deputy director of Partnership for Solutions, “because the more chronic conditions a person has, the more he or she needs and uses health care services.”

For example, spending doubles when a person has one chronic condition compared to a person without a chronic condition. And spending is about 14 times greater for a person with five or more chronic conditions. Almost all of the Medicare resources and the majority of Medicaid resources are used on behalf of beneficiaries with one or more chronic conditions.

Findings also indicated that two thirds of the Medicare spending is on behalf of people with five or more chronic conditions. To better meet the health care needs of the growing number of people with chronic and multiple chronic conditions, the current health care system needs to be reoriented from acute, episodic illness treatment to a system that provides continuity, ongoing management and coordination.

“Chronic conditions need to be more effectively managed to prevent development of acute episodes of illness,” said Horvath. The chartbook offers a new model of care that considers some of the key issues that need to be addressed to improve care for people with chronic conditions and to ensure that resources including services and dollars are spent effectively. “The reality is that the lack of care coordination leads to poor health outcomes for people and unnecessary service utilization, such as inappropriate hospitalization, nursing home placements, and duplicate diagnostic tests,” said Anderson.