Health Care Costs and Financing

Half of all annual medical expenditures are for chronic diseases

Chronic conditions are responsible for nearly half of all annual health care expenditures for persons not in nursing homes or other institutions. In addition, more than a third of hospital-based expenditures are for the care of patients with these conditions, reveals a new study.

Patrick Conway, M.D., M.Sc., of Cincinnati Children's Hospital Medical Center, Steven Machlin, M.S., and Joel Cohen, Ph.D., from the Agency for Healthcare Research and Quality (AHRQ), and colleagues used data from the 2007 Medical Expenditure Panel Survey (MEPS). Produced by AHRQ, the annual survey collects data on medical expenditures, health conditions, health care services used, and individual consumer characteristics based on a nationally representative sample of about 15,000 households. The researchers grouped expenditures reported in MEPS into seven care categories: chronic conditions, acute illness, trauma or poisoning, pregnancy or birth-related, dental, routine preventative health care, and other.

An estimated $1.13 trillion was spent on health care for more than 300 million persons in the U.S. civilian noninstitutionalized population in 2007. Nearly half (47 percent) of these expenditures were for chronic conditions, with acute illness taking up another quarter (25 percent). Spending for the other five categories was 8 percent or less. Overall, 31.3 percent of all expenditures were for inpatient treatment, followed by office-based visits at 23.5 percent and prescription drugs at 20.7 percent. Prescription medicines (34.8 percent) and inpatient treatment (29.9 percent) accounted for nearly two-thirds of all spending on chronic conditions. Expenditures for chronic conditions increased from 31.7 percent for persons 0-17 years of age to more than half for those aged 45 and over.

More details are in "Patient-centered care categorization of U.S. health care expenditures," by Dr. Conway, Kate Goodrich, M.D., M.H.S., Dr. Machlin, and others in the April 2011 HSR: Health Services Research 46(2), pp. 479-490.

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