THE COSTS OF RHEUMATOID ARTHRITIS
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1 827 THE COSTS OF RHEUMATOID ARTHRITIS A PATIENT-ORIENTED STUDY OF CHRONIC DISEASE COSTS ROBERT F. MEENAN, EDWARD H. YELIN, CURTIS J. HENKE, DAVID L. CURTIS, and WALLACE V. EPSTEIN To detail the cost for one year of a chronic disease, 50 patients with Stage 111 rheumatoid arthritis were surveyed. Direct medical costs for this group were three times the national average, and 58% of these costs were covered by insurance. Indirect costs due to lost income were at least three times the direct medical costs, and transfer payments covered only 42% of these costs. Fiftyeight percent of the study group also sustained a major psychosocial loss. Uncovered income losses were the greatest economic burden for individuals with chronic rheumatoid arthritis. This striking ratio of indirect to direct medical costs has important implications for medical practice and health policy. From the Robert Wood Johnson Clinical Scholars Program and the Multipurpose Arthritis Center, University of California School of Medicine, San Francisco. and the Multipurpose Arthritis Center, Boston University School of Medicine, Boston, Massachusetts. Preparation of this article was supported by a grant from the Robert Wood Johnson Foundation, Princeton, New Jersey. The opinions, conclusions, and proposals in the text are those of the authors and do not necessarily represent the views of the Robert Wood Johnson Foundation. Robert F. Meenan, M.D., M.P.H.: Fellow in Rheumatology, University of California, San Francisco; Edward H. Yelin, M.C.P.: Department of City and Regional Planning, University of California, Berkeley; Curtis J. Henke, M.A.: Department of Economics, University of California, Berkeley: David L. Curtis: Fellow in Rheumatology. University of California, San Francisco; Wallace V. Epstein, M.D.: Professor of Medicine, University of California, San Francisco. Address reprint requests to Robert F. Meenan, M.D., M.P.H.. Multipurpose Arthritis Center, Boston City Hospital, 818 Harrison Avenue, Boston Massachusetts Submitted for publication February 16, 1978; accepted in revised form May 3, Health care costs are of growing concern to patients, physicians, and policy-makers. Most of the attention in this area has focused on medical costs in general and hospital costs in particular. However, the financial impact of disease on both the individual and the economy as a whole is not restricted to medical costs. Rice identified three categories of cost resulting from illness (I ). Direct costs include the cost of physicians, drugs, x- rays, hospitalization, and other specific items of medical care consumption. The second and third categories are indirect costs of illness which result from lost income. Indirect morbidity costs measure income losses due to disability, and indirect mortality costs, those due to death. These indirect costs accounted for 55% of total illness costs in 1972 (2). The three categories provide a useful framework for estimating the costs of illness, and they have been used to study a variety of diseases (3,4,5). Such studies aggregate cost data for broad diagnostic groups from a variety of sources. They measure the impact of disease on the national economy, but provide little information on the nature and magnitude of disease costs from the perspective of the individual patient. Individual costs may differ from those found in aggregate studies, and these differences would have important implications for medical practice and policy, Published studies on the cost of disease include minor illnesses in their broad diagnostic groupings. However, chronic conditions produce a large and growing share of patient complaints, physician time, and Arthritis and Rheumatism, Vol. 21, No. 7 (September-October 1978)
2 828 MEENAN ET AL health care expenditures (6) and they frequently have a profound socioeconomic impact on both patient and family. Thus it is particularly important to investigate the costs of chronic disease. Rheumatic diseases are among the most prevalent chronic illnesses (7) and they often have significant economic consequences. The present study uses Rice s framework and a direct survey to measure the costs of one year of rheumatoid arthritis in a group of individuals. Study Design METHODS Fifty people with rheumatoid arthritis from five different practices in the San Francisco Bay area were studied. The settings included a university specialty clinic, a large fee-forservice group practice, and three private rheumatology practices. Individuals were considered eligible if they had Anatomic Stage 111 rheumatoid arthritis* and no other major illness, were between the ages of 21 and 65, and had been followed in that practice setting for at least one year. The criteria were designed to produce a study group with a firm diagnosis of relatively homogeneous severity in which cost data would not be unduly complicated by multiple sources of care or the presence of unrelated illness. Each participating physician kept a prospective log of eligible patients. Individuals who were willing to participate completed a questionnaire at home with the help of a member of the study team. Most patients were able to consult financial records when providing cost and.income information. The study team reviewed the medical records and hospital bills of each subject to supplement the questionnaire and to determine which costs were attributable to rheumatoid arthritis. The participating physicians submitted 63 names. Nine subjects were rejected because they did not meet the study criteria, and 4 declined to participate. All participants provided information on their demographic, occupational, and disease characteristics. The demographic items included age, sex, race, marital status, and education. Social class was assigned using a three-category modification of the scale of Duncan, which is based on income, occupation, and job prestige (9). Housewives were ranked by their husband s social class. Occupational characteristics were classified by a three-way modification of the twelve category scale of the Bureau of the Census (lo), by the presence or absence of supervisory responsibility, and by the extent of physical exertion. The disease characteristics included duration determined from year of symptom onset and functional capacity according to American Rheumatism Association Functional Class*. * The Anatomic Stages of rheumatoid arthritis are as follows: Stage 1: no destructive x-ray changes; Stage 11: x-ray evidence of osteoporosis with or without slight cartilage or subchondral bone destruction; no joint deformities; Stage 111: x-ray evidence of cartilage and bone destruction in addition to osteoporosis; joint deformity may be present; Stage IV: criteria for Stage I11 plus fibrous or bony ankylosis. (8) Cost Analysis Data were collected on the medical costs and income losses due to one year of illness. The design of the study precluded any estimate of income losses due to mortality. Direct medical costs included: outpatient costs, including physician and other practitioner visits, laboratory and radiology charges, drugs, and devices; inpatient costs, including surgeon and other hospitalization-related physician charges; and miscellaneous direct costs, including transportation and other visit-associated costs, and the costs of nonprescribed therapies. Cost figures for non-m.d. practitioners devices, inpatient costs, and miscellaneous direct costs were taken directly from questionnaires and hospital bills. All other outpatient costs were estimated by using data on units of service and applying unit costs based on the prevailing charges at the University of California, San Francisco Clinics. Income changes were estimated separately for wage earners and housewives. For those employed prior to disease onset, expected earnings for 1976 without arthritis were estimated individually from their premorbid earnings by the following method: premorbid earnings were divided by the median earnings for that year of all U.S. workers of similar sex and occupation, and this ratio was then used to multiply the median 1976 earnings of that same group to obtain an estimate of expected individual earnings. Premorbid income was therefore considered to increase during the intervening years at the same rate as the median income of all full time U.S. workers of similar sex and occupation. No adjustments were made for promotion and seniority on the one hand, or for unemployment rates on the other. Income losses were then computed by comparing expected income to the income actually earned during the study year. Individuals whose earned income was at least $200 less than expected were classified as having income losses. Income losses for housewives were computed using the market value estimates of Walker and Granger (12), and adjusting to current dollars. This approach values each duty the housewife performs by estimating the cost of substituting workers from the labor force. Values vary by fiveyear age ranges due to average differences in the number and age of children. Housewives who reported that they could perform all regular duties but with discomfort or limitation (ARA Functional Class 11) were considered to have suffered a 50% loss of housewife value. Those who could not perform all their regular tasks (ARA Class 111) were considered to have suffered a 75% loss. There is no satisfactory way to measure the psychosocial costs of illness other than those related to work disability. However, in order to derive a semi-quantitative esti- * The ARA functional classification includes four categories: Class I: complete functional capacity with ability to carry on all usual duties; Class 11: functional capacity adequate to conduct normal activities despite handicap of discomfort or limited mobility of one or more joints; Class 111: functional capacity adequate to perform only a few or none of the duties of normal occupation or of self-care; Class IV: largely or wholly incapacitated with patient bedridden or confined to wheelchair, permitting little or no self-care (1 I).
3 THE COSTS OF RA 829 mate of these costs, subjects were asked if they had experienced any of five specific psychosocial changes: marital disruption (divorce, separation); changes in family structure (living with relatives); changes in family employment (increases to provide income or decreases to provide home care); changes in place of residence (cost, physical barriers); and major psychiatric problems. A positive response was recorded in each instance where one of the changes resulted in large part from the effects of illness. Insurance and Disability Income Insurance coverage of direct and indirect costs was estimated by determining health insurance coverage and transfer payments related to disability. All subjects provided detailed descriptions of their coverage. The dollar value and percentage of direct medical costs covered were calculated using this information. Deductibles and co-insurance were applied sequentially to outpatient costs, and then to inpatient costs, if appropriate. Insurance premiums were not included as one of the costs of illness on the assumption that most of the subjects would have purchased health insurance in any case. Each subject provided data on the sources and amount of transfer payments received as a result of his or her arthritis. Transfers included disability income, welfare payments, and aid to families with dependent children. Food stamps and intrafamily income transfers were not included. The dollar value of transfer payments was compared to income losses to measure insurance coverage for this category of disease costs. Statistical Tests Statistical tests of significance were performed using Student s t test, chi-square test with Yate s correction, and one-way analysis of variance. A significance level of (Y = 0.05 was employed in each case. RESULTS There were 12 males and 38 females in the study group. The average age was 48 f 1.4 (mean k SEM) years, and 82% were high school graduates. Thirty-one were married, 10 divorced or separated, 3 widowed, and 6 single. Eleven individuals were considered low social class, 20 as middle, and 19 as high. Occupationally, 7 were classified as managers, 14 as clerical workers, 17 as manual laborers, and 12 as housewives. Thirteen of the workers (34%) had supervisory duties. The average duration of disease was 9.8 f 1.0 years. At the time of the interview, 26 of the arthritics considered themselves to be Functional Class 11, and 24 to be Class 111 or worse. The arthritis patients in this sample visited their primary arthritis physician an average of 8.3 f 1.0 times during the year. The average number of visits to all physicians for their arthritis was f 1.2, or approximately once per month. Demographic and disease characteristics were not significantly different among the various practice settings (Table 1). Medical Costs The direct medical costs incurred by this group during the study year are indicated in Table 2. They average $2,319 for the entire group; $3,184 is the average for housewives and $2,046 for workers. However, there was a large variation in the sample, and medical costs Table 1. Patient Characteristics by Practice Setting Practice Setting* A B C D E Number Sex? Age$ Duration of disease$ Functional class4 Office visits to primary RA MD Office visits to all MDs for RA Outpatient costs Total medical costs 16 5/ f f 1.1 8/8 6.9 f f f f / f f 3.1 2/3 8.2 f f f f I / f f 2.4 6/ f f f f / f f 1.7 5/7 9.8 f f f f I / f f 3. I 5/5 II.Of f f f 1660 * A = University clinic; B, C, E = solo practices; D = fee-for-service group practice. t Male/Female. $ In years. 4Class II/Class 111 and IV.
4 830 MEENAN ET AL Table 2. Direct Medical Costs During One Year for Fifty People with Stage III Rheumatoid Arthritis Cost Category Mean f SEM % oftotal '?6 of Subtotal Outpatient M.D. visits Other visits Labs X-rays Drugs Devices Inpatient Miscellaneous Transportation Expenses Other therapy Total direct $ 651 f 58 I89 f f f f f f 23 $ I544 f 534 $ 129f28 51 f 10 27f f 21 $2319 f I I were actually less than $1,000 for 58% of these patients. Hospital costs accounted for a major share of medical costs despite the fact that only 13 patients were hospitalized during the year. Medical costs averaged $7,077 in the hospitalized group, but only $647 for the rest of the individuals. Physician visits and drugs accounted for over half of the total outpatient costs. Laboratory charges were the third largest component. Transportation, other visit-associated costs, and nonprescribed therapies repres'ented a minor portion of direct costs. Medical costs were analyzed to see if they differed significantly for any particular group. Cost breakdowns by a variety of demographic and disease variables were performed. In general, medical cost totals and proportions did not vary predictably with measures of socioeconomic rank. Analysis of medical costs by func- - tional class revealed only minor differences in laboratory and x-ray costs, and a similar breakdown by disease duration uncovered no significant differences. Finally, visit costs, outpatient costs, and total medical costs did not differ significantly across practice settings. (Table 1 ). Income Losses There were 38 wage earners and 12 housewives in the study group. Twenty-nine (76%) of the workers had undergone major changes in employment status due to their disease. Of this number, 25 were totally disabled, 2 were working reduced hours, and 2 had changed jobs. Thirty of the workers (79%) had indirect morbidity costs of $200 or more, based on a comparison of their actual and expected earnings during the study year. Workers with income losses were not significantly different from those without losses by any measured demographic or occupational characteristic. As expected, a much higher proportion of those with losses were Functional Class 111 and IV. Income losses are shown in Table 3. They averaged $7,711 for all workers in the sample and $10,500 for workers with lost income due to arthritis. Fifty-three percent of all workers and 57% of those who lost income had estimated 1976 earnings of less than $10,000. Imputed income losses for housewives averaged $3,958. Income losses constituted 75% of total arthritis costs for the entire sample of 50 during the study year. They represented 79% of total illness costs for all workers, 69% of costs for workers with estimated earnings of less than $IO,OOO, and 84% for workers with income losses. Imputed income losses were 55% of total illness costs for the housewife with arthritis during There were no significant differences in the disability rate or the percent- Table 3. Income Losses During One Year of Stage III Rheumatoid Arthritis Estimated Earnings Average I$10,000 > $ Patients Number Loss (32)* (18) All subjects 50 $6810 f $44 16 f 509 $ f 3501 Workers All I f f 800 I1067 f 3501 (20) (18) With income losses f f f 3727 (17) (13) Housewives f f * Number of subjects in each category
5 ~~ THE COSTS OF RA 83 1 Table 4. Comparative Coverage of Direct and Indirect Costs Direct Costs Indirect Costs Total OPD* Hospital Work Losses Housewife Losses Average coverage 58% 60% 86% 42% 45% Net uncovered cost $524 $226 $699 $6760 $2275 Prevalence of: > 50% coverage 64% 70% 92% 34% 0 < $250 net cost 46% 66% 54% 12% 0 > $lo00 net cost 12% 0 31% 82% 83% * OPD = Outpatient delivery. age of expected earnings lost across premorbid class, job, and income categories. Fifty-eight percent of the study group experienced at least one major psychosocial cost that was due mainly to their disease. These costs included 6 marital breakups, 19 changes in family structure or employment, and 9 psychiatric disturbances. In addition, all the arthritics cited the effects on their leisure activities as another major cost of illness. Workers who lost more than 50% of their expected earnings had more psychosocial changes than those with smaller indirect costs (1.69 f 0.09 versus 1.33 f 0.14: P = 0.038). Cost Coverage All except 2 of those in the study group had insurance coverage for medical costs. In 14 cases, the major coverage was by Blue Cross/Blue Shield, and in 19 cases by commercial underwriters. Nine people were covered under Medicare as part of Social Security disability and 5 under Medicaid. None of the policies excluded arthritis therapy or any major category of service. Table 4 illustrates that 58% of medical costs were covered by insurance in the average case. More importantly, the rate of coverage increased with increasing costs, so that those people with the highest costs had the highest percentage of coverage. Twelve of the patients in the sample had to pay between $500 and $1,000 outof-pocket and 6 had to pay over $1,000. However, uninsured medical expenses, including drugs and miscellaneous costs, were less that $250 for the year in nearly half the group. Thirty of the 38 workers and, by definition, all 12 housewives suffered lost income due to their arthritis. Twenty-six of these 42 were receiving disability income or other forms of income supplement. Eighty-eight percent of this group were receiving some form of cash assistance from the government. Most of those who were not receiving aid were housewives. Table 4 depicts the extent of coverage for indirect disease costs in this chronic disease group. Transfer payments for the average worker equalled 42% of their losses, leaving a net cost of $6,760. Only one-third of the workers were receiving at least 50% of their expected income. Table 5 shows that large dollar losses were not restricted to those with high incomes. In the group of workers with low expected incomes, net losses due to indirect disease costs averaged $3,550, and 60% of the group had net losses of $3,000 or more. Uncovered direct costs for the same group averaged only $561. Table 5. Comparative Cost Coverage for Workers by Estimated Income Level I $1O,OOo* > $10.000* Direct Costs Indirect Costs Direct Costs Indirect Costs Average coverage 61% 45% 57% 38% Net uncovered cost $561 $3550 $341 $10,960 Prevalence of: > 50% coverage 82% 41% 46% 23% <$250 net cost 35% 18% 54% 8% >$lo00 net cost 18% 80% 0 92% * Estimated 1976 earnings.
6 832 MEENAN ET AL DISCUSSION All prior studies, with the exception of one (13), of the costs of rheumatic diseases have derived from aggregate data surveys which group individuals with various types and stages of disease. Such studies provide data on the cost to the national economy of broad categories of disease. However, they obscure the magnitude of medical costs and income losses for individuals with specific illnesses. The present study used a nonaggregate approach to estimate the costs incurred by individuals with a specific, established disease. Approximately 200,000 Americans have Stage 111 rheumatoid arthritis (14, IS), and the results of this study indicate that the costs faced by these individuals are unambiguously high. Medical costs averaged $2,3 I9 a year among the study group. This is three times the average cost incurred by all Americans for medical services in 1976 (16). Physician visits, medications, and laboratory fees were the largest components of outpatient costs. Costs were higher still for those who required hospitalization. Transportation costs, found previously to be a major factor in attending a regional rheumatic disease clinic (17), were relatively small. In general, medical costs, especially large hospital bills, were well covered, and the net cost to the individual was frequently less than $500 for the year. The major economic burden from this chronic disease was in the form of indirect morbidity costs. Income losses for the study year averaged $7,711 among those employed at the onset of their disease. Among housewives, imputed income losses averaged $3,958. These costs were not covered to nearly the same extent as medical costs. Transfer payments restored only 42% of income losses on the average, and only one-third of workers were receiving payments of 50% of their expected earnings. The average net morbidity cost was $3,550 for workers with incomes of $10,000 or less. Income losses in the study group exceeded medical costs by a factor of 3 to 1. This ratio increased to 4 : 1 among all workers and 5: 1 among workers with wage losses. These estimates exceed the 1.5: 1 which Cooper and Rice found for all persons with any form of musculoskeletal condition (18), but they may still underestimate the extent to which income losses outweigh the medical costs of chronic rheumatoid arthritis. First, the protocol systematically inflates the medical cost component by selecting patients followed by a rheumatologist and by using unit prices based on medical center charges. Regular visitors probably have higher medical costs than those who visit the physician less often, and specialty care, at least in the short run,.is apt to be more expensive. The study design also systematically deflates morbidity costs. The method used to estimate wages assumes neither seniority or merit raises, nor any income-increasing changes in occupation. Such changes would be quite likely in the absence of arthritis and would increase earnings and disease-related income losses for the study year. Adjustment for unemployment is unlikely to have a major effect on this strong negative bias. Finally, differential coverage of direct and indirect costs markedly increases net morbidity losses relative to net medical costs. On this basis alone, the ratio of indirect to direct costs for arthritis patients with wage losses would increase markedly above the 5: 1 found in this study. The economic burdens of chronic rheumatoid arthritis were not restricted to individuals of lower socioeconomic groups, but occurred across a broad spectrum of job, class, and income. There were no consistent differences in the magnitude of the medical costs experienced by the social classes as defined by Duncan s scales, or the indexes of job auhnomy and physical exertion. Moreover, the disability rate and wage loss as a percentage of expected earnings did not differ significantly across the various socioeconomic scales employed. Psychosocial losses were also found in all classes, and there was a relationship between the magnitude of economic losses and the number of such changes. The results of this study have implications for both medical practice and health policy. The clinician must remember that the individual experiences chronic rheumatoid arthritis as a multidimensional problem. In addition to causing serious medical difficulties, it also affects every aspect of the person s life from finances to social relationships to personality (19,20). These economic and psychosocial problems will exist despite the best available medical and surgical therapy. Physicians who care for patients with chronic illnesses should anticipate such problems and help the patient and family deal with them. When appropriate, other health professionals whose training is more pertinent to these areas might be consulted. These findings also raise interesting questions for health policy. The prevailing concern for health costs and the gradual evolution toward more comprehensive medical coverage stem in large part from a desire to relieve the financial impact of illness on the individual. Current policy options, such as national health insurance and limits on hospital costs, are primarily aimed at decreasing the direct cost burden. However, these are only a small portion of the total cost of illness. In
7 THE COSTS OF RA 833 addition, studies which have applied comprehensive, multidisciplinary approaches to the care of rheumatoid arthritis show little improvement in long term function or employment compared to standard care (2 1,22). Although certain arthritis patients who are receiving substandard therapy might benefit, these studies suggest that the functional and employment status of the average person with rheumatoid arthritis will not be substantially improved by additional medical care. In the face of major income losses and the absence of firm evidence that increases in medical care can restore productive function, policy options which will lessen the indirect costs of this chronic disease, such as expanded income supplement programs and sheltered workplaces, should be given serious consideration. ACKNOWLEDGMENTS The authors wish to acknowledge the cooperation of Drs. C. Melvin Britton, Paul Davidson, Allen Jackman, and Richard D. Smith. I REFERENCES Rice DP Estimating the Costs of Illness (PHS Health Economic Series #6). Washington, DC, US Government Printing Office, 1966 Cooper BS, Rice DP: The economic cost of illness revisited. Soc Security Bull 39(2):21-36, 1976 Thom T: Economic aspects of arteriosclerosis. Arteriosclerosis: Report of the National Heart and Lung Task Force on Arteriosclerosis (DHEW Publication No. NIH ). Washington, DC, US Government Printing Office, 1972 Grossman M: Economic costs of respiratory disease. Respiratory Disease: Task Force on Problems, Research Approaches, Needs (DHEW Publication No. NIH ). Washington, DC, US Government Printing Office, 1972 Nuki G, Brooks R, Buchanan WW: The economics of arthritis. Bull Rheum Diseases, 23: , 1973 Health: United States, 1975 (DHEW Publication No. HRA ). Washington, DC, US Government Printing Office, Prevalence of Chronic Skin and Musculoskeletal Conditions-United States 1969 (DHEW Publication No. HRA ). Washington, DC, US Government Printing Office, 1974 Steinbrocker 0, Traeger CH, Butterman RC: Therapeutic criteria in rheumatoid arthritis. JAMA 140: , 1949 Duncan OD: A socioeconomic index for all occupations. Occupations and Social Status. Edited by AJ Reiss. Glencoe, Ill., Free Press, 1961 US Bureau of the Census: Money income in 1974 of families and persons in the United States. Current Population Reports (Series P-60, No. 10). Washington, DC, US Government Printing Office, 1975 Steinbrocker 0, Traeger CH, Butterman RC: Therapeutic criteria in rheumatoid arthritis. JAMA 140: , 1949 Walker KE, Granger WH: The Dollar Value of Household Work (Information Bulletin No. 60). lthaca, New York, College of Human Ecology, 1973 Fox SR, Masi AT, Robinson H, Jacob DL, Kaplan SB: Earnings of early diagnosed arthritis patients and matched controls. J Chronic Dis 29: , 1976 O'Sullivan JB, Cathcart ES: The prevalence of rheumatoid arthritis. Ann Intern Med , 1972 Cathcart ES, O'Sullivan JB: Rheumatoid arthritis in a New England town. N Engl J Med 282: , 1970 Gibson RM, Mueller MS: National health expenditures, Fiscal Year SOC Security Bull 40(4):3-22, 1977 Henke CJ, Yelin EH, Ingbar ML, Epstein WV: The university rheumatic disease clinic: provider and patient perceptions of cost. Arthritis Rheum 20: , I977 Cooper BS, Rice DP: The economic cost of illness revisited. SOC Security Bull 39(2):21-36, 1976 Spergel P, Ehrlich GE: The rheumatoid personality: a psychodiagnostic myth. Presented at the XIV International Congress of Rheumatology, San Francisco, June 26-J~ly I, 1977 Strauss AL: Chronic Illness and the Quality of Life. St Louis, C.V. Mosby, 1975 Lee P, Kennedy AC, Anderson J, Buchanan WW: Benefits of hospitalization in rheumatoid arthritis. Q J Med 43~ , Katz S, Vignos PJ, Moskowitz RW, Thompson HN, Svek KH: Comprehensive care in rheumatoid arthritis: a controlled study. JAMA 206: , 1968
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