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Causes of and Potential Solutions to the High Cost of Health Care

Chronic Conditions in the U.S.: Implications for Service Delivery and Financing


On October 10, 2003, Jane Horvath, M.H.S.A., made a presentation in a Web-Assisted Audioconference at Session 2, which was entitled Reining in the Cost of Chronic Illness.

This is the text version of Ms. Horvath's slide presentation. Select to access the PowerPoint® Slides (414 KB).


Chronic Conditions in the U.S.: Implications for Service Delivery and Financing

Jane Horvath, M.H.S.A.
Deputy Director
Partnership for Solutions
A Project of Johns Hopkins University and
The Robert Wood Johnson Foundation

Slide 1

Chronic Conditions in the U.S.

  • Chronic conditions are expected to last a year or more, limit what one can do and may require ongoing care.
  • Chronic conditions are a significant and growing challenge.
  • People with chronic conditions have significantly higher utilization and health care costs.
  • Coordination of services for people with chronic conditions is lacking.
  • There are opportunities for change.

Slide 2

"The number of people with chronic conditions is rapidly rising."

Bar graph with "people with chronic conditions" on the Y axis- ranging from 100 to 200 in units of millions. The X axis is years, going in increments of 5 from 1995 to 2030.

1995= 118.
2000= 125.
2005= 133.
2010= 141.
2015= 149.
2020= 157.
2025= 164.
2030= 171.

Source: Wu, Shin-Yi and Green, Anthony. Projection of Chronic Illness Prevalence and Cost Inflation. RAND Corporation, October 2000.

Slide 3

"Almost half of people with a chronic condition have multiple chronic conditions."

Bar graph, the Y axis is percent of all Americans, ranging from 0 to 30 percent. The X axis is number of chronic conditions ranging from 1 to 5+.

1= 24 percent.
2= 11 percent.
3= 5 percent.
4= 4 percent.
5+= 1 percent.

Source: Wu, Shin-Yi and Green, Anthony. Projection of Chronic Illness Prevalence and Cost Inflation. RAND Corporation, October 2000.

Slide 4

One-Quarter of individuals with chronic illness also have activity limitations.

Venn diagram with two circles. One is called, "Chronic illness only", the other is called, "activity limitation only" where they overlap is called, "both."

90 million people are listed as "chronic illness only."
7 million are activity limitation only and 30 million are both.

Eighty-one percent of those with activity limitations also have a chronic condition.

Although there are 37 million people with activity limitations living in the community, about 2.7 million adults are severely impaired and need assistance with three or more activities of daily living—eating, dressing, getting in or out of a bed or a chair, or using the toilet.

Source: (Feder, Komisar, and Niefeld, "Long-term Care In The United States: An Overview," Health Affairs 19:3, May 2000).
Source: Source: Medical Expenditure Panel Survey, 1998.

Slide 5

Most people with chronic conditions have private health insurance.

Pie chart labeled:
Population of People with Chronic Conditions in 1998
n =120 million

Private insurance= 55 percent.
Uninsured= 7 percent.
Medicaid= 9 percent.
65+ Medicare/Medicaid= 3 percent.
65+ Medicare only= 8 percent.
65+ Medicare/Private= 13 percent.
Unknown= 2 percent.
Other Government Insurance= 3 percent.

"Private health" Almost sixty-six million Americans with a chronic condition have private health insurance.
Eleven million non-institionalized Americans with chronic condition have only Medicaid coverage.
Eight and a half million Americans with one or more chronic conditions are uninsured.

Source: Medical Expenditure Panel Survey, 1998.

Slide 6

Health care spending for people with chronic conditions accounts for 78 percent of all health care spending.

Bar graph with percentages of spending on people with chronic conditions by insurance category.

Medicaid beneficiaries= 77 percent.
Uninsured= 58 percent.
Privately insured= 68 percent.
Age 65+ with medicare and private insurance= 95 percent.
Age 65+ with medicare and Medicaid= 97 percent.
Age 65+ with medicare only= 96 percent.
All Americans= 78 percent

"78 percent" Seventy-eight percent of health care spending is attributed to the 44 percent of the noninstitutionalized population that has one or more chronic conditions.
Sixty-eight of private health insurance spending is attributed to the 40 percent of privately insured people who have chronic conditions.
Three-fifths of all health care spending for the uninsured is for care received by the 27 percent of uninsured with chronic conditions. Seventy-seven percent of Medicaid spending is for the almost 40 percent of noninstitutionalized beneficiaries with chronic conditions.
Ninety-seven percent of spending for the non-institutional dually eligible population is for the 87 percent of this population with chronic conditions.

Source: Medical Expenditure Panel Survey, 1998.

Slide 7

Health care spending Increases with the Number of Chronic Conditions.
Bar graph of increases in spending by number of chronic conditions.

0 Conditions = $800.
1= 1,900.
2= 3,400.
3= 5,600.
4= 8,900.
5 + = >11,000.

Slide 8

People with chronic conditions are the heaviest users of medical care.
Bar graph of percent of services used by people with chronic conditions listed by type of service.

Home health visits= 96 percent.
Prescriptions= 88 percent.
Physician visits= 72 percent.
Inpatient stays= 76 percent.
Source: Medical Expenditure Panel Survey, 1998.

Slide 9

People with multiple chronic conditions are much more likely to be hospitalized.
Bar graph. Y axis is "percent of people with inpatient hospital stay."
X axis is number of chronic conditions listed from 0 to 5+. X axis has three bars per number. The bars are "all", "no limitations" and "with limitations."

0 chronic conditions: all= 5 percent no= 3 percent with= 12 percent 1: all= 7 percent no=5 percent with= 14 percent.
2: all= 12 no=9 with= 19.
3: all= 16 no=12 with=21.
4: all= 26 no= 16 with= 34.
5+: all= 33 no= 27 with= 36.

Source: Medical Expenditure Panel Survey, 1998.

"Hospitalized" People with five or more chronic conditions are eight times more likely to be hospitalized during the year than people with no chronic conditions.

Rates of hospitalizations are generally two to three times higher for people with activity limitations than for those without limitations.

People with five or more chronic conditions have four times as many physician visits and almost 16 times as many home health visits as people with one chronic condition.

People with chronic conditions fill an average of 48 prescriptions compared to 7 for people with one condition. Among those who have activity limitations, the person with 5 or more conditions fills an average of 54 prescriptions compared to 10 prescriptions for the person with one condition.

Slide 10

More than half of people with serious chronic conditions have three or more different physicians.

Pie chart of number of different physicians seen by people with serious chronic conditions.

No physicians= 3 percent.
1= 16 percent.
2= 26 percent.
3= 23 percent.
4= 15 percent.
5= 6 percent.
6+= 11 percent.

Source: Gallup Serious Chronic Illness Survey 2002.

Eighty-one percent of people with serious chronic conditions see two or more different physicians.
The average Medicare beneficiary sees an average of six unique physicians and those with 5 or more chronic conditions see 14 different physicians.

Slide 11


People with chronic conditions report getting conflicting advice.

Bar graph with percent of people reporting a problem, and the type of problem.
Received different diagnosis from different providers = 14 percent.
Received information about drug interactions upon filling prescription = 16 percent.
Received conflicting information from providers = 17 percent.
Had duplicate tests or procedures = 18 percent.

Source: Chronic Illness and Caregiving, a survey conducted by Harris Interactive, Inc., 2000.

Slide 12

Physicians believe that poor care coordination produces bad outcomes. Bar graph of percent of physicians who believe that adverse outcomes result from poor care coordination by type of problem.

Receipt of contradictory information = 54 percent.
Emotional problems unattended = 49 percent.
Adverse drug interactions = 44 percent.
Unnecessary hospitalization = 36 percent.
Patients not functioning to potential = 34 percent.
Experience of unnecessary pain = 34 percent.
Unnecessary nursing home placement = 24 percent.

Inadequate care coordination can be costly for patients and other payers when it leads to unnecessary nursing home placements, inappropriate hospitalizations, or adverse drug interactions.
Specialists report having greater difficulty coordinating care than general practitioners.
Good care coordination should be considered a necessary part of high-quality care.

Source: National Public Engagement Campaign on Chronic Illness-Physician Survey, conducted by Mathematica Policy Research, Inc., 2001.

Slide 13

Poor care coordination leads to unnecessary hospitalizations.

Line graph with data points. Hospitalizations for ambulatory care sensitive conditions per 1000 medicare beneficiaries ages 65+ listed by number of chronic conditions.

0 chronic conditions = 0 hospitalizations.
1 = 7.
2 = 18.
3 = 36.
4 = 62.
5 = 95.
6 = 131.
7 = 169.
8 = 219.
9 = 236.
10+ = 261.

Source: Medicare Standard Analytic File, 1999.

Ambulatory care sensitive conditions (ACSCs) are conditions for which timely and effective outpatient primary care may help to reduce the risk of hospitalization.
Inappropriate hospitalizations increase as the number of chronic conditions increase.
People with multiple chronic conditions use medical goods and services at higher rates than others and they often receive duplicate testing, conflicting treatment advice, and prescriptions that are contra-indicated.
These factors may play a role in the correlation between increasing numbers of chronic conditions and increasing numbers of inappropriate hospitalizations.

Slide 14

How do we improve the system?

  • Benefits.
    • Medical necessity determinations and policies.
  • Disease Management.
  • Payments.
    • Clinical care case management fee.
    • Pharmacy coordinator.
  • Quality.
    • Care Coordination as a quality measure for health systems.

Return to Audioconference

Current as of July 2003


Internet Citation:

Chronic Conditions in the U.S.: Implications for Service Delivery and Financing. Slide Presentation by Jane Horvath, at Web-Assisted Audioconference, "Causes of and Potential Solutions to the High Cost of Health Care." Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/ulp/hicosttele/sess2/horvathtxt.htm


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