The Effect of Obesity and Chronic Conditions on Medicare Spending, 1987-2011

Slowing the growth in Medicare expenditure is a key policy goal. Rising chronic disease prevalence is responsible for much of this growth.

The first goal of this study is to estimate the percentage of Medicare spending growth that is attributable to increasing disease prevalence rates of diabetes, hyperlipidaemia, hypertension and heart disease. Second, we estimate how much of this prevalence-related spending growth is attributable to rising obesity rates.

We employ spending decomposition equations to estimate the percentage of Medicare spending growth that is attributable to rising chronic disease prevalence, and we use two-part models to estimate the portion of prevalence-related spending that is potentially due to obesity.

For our four conditions of interest, growing disease prevalence accounted for between 13.6 % (in heart disease) and 58.9 % (in hyperlipidaemia) of Medicare expenditure growth. Up to 17.0 % (in diabetes) of the expenditure growth due to prevalence increases may be attributable to obesity and therefore may be modifiable.

Rising obesity rates contribute to chronic disease prevalence, which, in turn, can lead to higher Medicare expenditures. To slow the growth in spending, policy makers should consider targeting obesity, using approaches such as improving pharmacotherapy coverage and providing intensive care coordination services to Medicare enrollees.