Why is Medicare so Expensive? Episode III

The rise of chronic disease

Published on October 12, 2012by Abdul El-Sayed

We spent $509 billion in total Medicare expenditures in 2010. That’s 12 percent of the federal budget—and a lot of money.

In part one of this series, we established four trends that are fundamental to understanding the rising cost of Medicare. Part two addressed demographic transitions in the United States.  Here, we take on the changing disease character of older adults.

Medically, elderly Americans look vastly different in 2012 than they did in the early years of Medicare. For one, their tummies have taken on a distinctly more rotund form. Today’s elderly Americans are much more likely to be obese than their predecessors. A whopping 70 percent of Americans over the age of 70 are overweight or obese. In the 30-year span between 1976 and 2006, obesity among men aged 65-74 increased from 13 percent to 33 percent. More striking, obesity among men aged 75 years or older jumped from 1 percent to a whopping 25 percent. Among women aged 65-74 years, obesity rose from 22 percent to 37 percent, and from 1 percent to 24 percent among those aged 75 years or older.

Diabetes is also much more common in today’s elderly than it was in the past. Diabetes is now the 7th leading cause of death among the elderly—and a direct contributor to most other leading causes, including cardiovascular disease, the most deadly disease overall. Nearly 25 percent of Medicare beneficiaries had a diagnosis of diabetes in 2007—a 15 percent increase in just 15 years. Today, nearly half of all people with diabetes have public insurance—8.5 million of them through Medicare.

Care for these conditions is expensive—for example, one study in the journal Health Services Research suggests that healthcare costs are up to 13 percent higher among men and 17 percent higher among women who are overweight or obese as compared to those of normal weight. And diabetes is a real bank-breaker: estimated to account for 25 percent of the Medicare budget annually, it contributes an excess of nearly $10,000 in annual healthcare costs.

What makes obesity and diabetes so problematic is that they are, by definition, chronic. Their victims suffer—and wrack up huge healthcare bills—for a long, long time. Most obese and diabetic beneficiaries are obese and diabetic well before they reach Medicare eligibility—meaning they pose an added financial liability on Medicare for the entire tenure of their Medicare eligibility.

What’s worse, Americans are becoming obese and diabetic at ever-younger ages. For example, a 2005 study showed that between 1988 and 2000, the average age at diabetes diagnosis decreased from age 52 to age 46. That has a knock-on effect on Medicare costs because these conditions are progressive—their symptoms get worse with age. Therefore, as people contract these diseases earlier, they are likely to be more severe—hence more costly—by the time they reach Medicare eligibility.

Another increasingly common disease that threatens to drive Medicare costs sky-high is dementia. The Alzheimer’s Association notes that between 2000 and 2008, while the number of deaths to other leading causes—like cardiovascular disease and common cancers—fell, deaths due to dementia increased by 66 percent.

Part of the reason dementia deaths are on the rise is precisely because death rates from other diseases are decreasing (therefore “unmasking” dementia among those who would have otherwise died of other diseases), but with respect to our conversation about Medicare costs, dementia is really expensive. In 2011, estimated costs of Alzheimer’s disease were $183 billion—more than half of those costs were born on Medicare. The Alzheimer’s Association estimates that by 2050, Medicare spending on dementia will increase over 6-fold.

The policy implications of the financial havoc chronic disease has wrought on Medicare is clear—addressing the growing burden of chronic disease among Medicare beneficiaries should be an obvious goal.

Unfortunately, however, attempts to do that have focused more on individual responsibility and choice rather than on the contextual drivers of diseases like obesity and diabetes—changes in the food environment that have made energy-dense, low-nutrient foods much cheaper than less obesity-inducing choices; the mass adoption of technologies that decrease the amount of transport physical activity the average American does throughout the day; and changing social norms that promote more passive leisure time activities.

In the next episode, we’ll consider how the rise in healthcare technologies has inflated Medicare costs. Stay tuned.

Edited by Dana March