Differences In Disease Prevalence As A Source Of The U.S.-European Health Care Spending Gap

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1 Differences In Disease Prevalence As A Source Of The U.S.-European Health Care Spending Gap Americans are diagnosed with and treated for several chronic illnesses more often than their European counterparts are. by Kenneth E. Thorpe, David H. Howard, and Katya Galactionova ABSTRACT: The United States spends more on health care than any European country. Previous studies have sought to explain these differences in terms of system capacity, access to technologies, gross domestic product, and prices. We examine differences in disease prevalence and treatment rates for ten of the most costly conditions between the United States and ten European countries using surveys of the noninstitutionalized population age fifty and older. Disease prevalence and rates of medication treatment are much higher in the United States than in these European countries. Efforts to reduce the U.S. prevalence of chronic illness should remain a key policy goal. [Health Affairs 26, no. 6 (2007): w678 w686 (published online 2 October 2007; /hlthaff.26.6.w678)] The united states spends far more on health care than any European country (Exhibit 1). U.S. per capita spending in 2004 was $6,037, compared with $3,094 in the Netherlands, $3,169 in Germany, and $3,191 in France. Even Switzerland, which has the highest per capita health spending of any European country, spends only two-thirds as much per capita as the United States spends. 1 Previous studies have sought to explain these differences in terms of system capacity (that is, physicians, nurses, and hospital beds per capita), access to advanced technologies such as magnetic resonance imaging (MRI), gross domestic product (GDP) (that is, the income effect ), and prices. Neither system capacity nor access to technology appears to account for the higher level of spending in the United States compared with these European countries. 2 However, GDP is strongly related to health care spending. A 1 percent increase in GDP per capita is associated with (at least) a 1.2 percent rise in per capita health care spending, and Ken Thorpe (kthorpe@sph.emory.edu) is the Robert W. Woodruff Professor and Chair, Department of Health Policy and Management, Rollins School of Public Health, at Emory University, in Atlanta, Georgia. David Howard is an associate professor in that department; Katya Galactionova is a research associate there. w678 2 October 2007 DOI /hlthaff.26.6.w Project HOPE The People-to-People Health Foundation, Inc.

2 Spending Gap EXHIBIT 1 Real Per Capita Health Care Spending, United States And Ten European Countries, 2004 Austria Denmark France Germany Greece Italy Netherlands Spain Sweden Switzerland Total per capita spending on health, 2004 ($U.S. PPP) 3,418 2,972 3,191 3,169 2,669 2,437 3,094 2,099 2,827 4,045 As percent of U.S. total per capita spending on health, 2004 a United States 6, Median per capita total spending U.S. as percent of the median Average per capita total spending U.S. as percent of the average 3, % 3, % SOURCE: Organization for Economic Cooperation and Development, OECD Health Data 2007 (Paris: OECD, 2007). NOTE: Data from 2004 are used because it is the last year for which complete data are available. a Figures in this column are in National Currency Units indexed to 2000 dollars using each country s gross domestic product (GDP) deflator. cross-national variation in per capita GDP explains nearly 90 percent of the variation in this spending. 3 However, even when the relationship between GDP and health spending is taken into account, the United States remains a substantial outlier: Per capita spending is 42 percent higher than predicted. 4 More recent U.S.-European comparisons have attributed the unexplained residual spending in the United States to higher health care prices a component of spending per treated case. 5 Because prices cannot be observed directly for most services, the conclusion is based on Organization for Economic Cooperation and Development (OECD) data showing little difference in capacity physicians, nurses, and hospital beds per capita and hospital days per capita between the United States and OECD countries. 6 Thus, the residual (and unmeasured) differences in spending are thought to reflect higher payments for services in the United States. Higher U.S. spending may also reflect greater disease burden and higher rates of disease treatment. Differences in diagnosed and treated disease prevalence have received less attention in the literature on spending in the United States and Europe, except as measures of system performance. 7 However, within the United States, increases in chronic disease rates have contributed to the growth of health care spending. 8 There are several reasons why disease treatment rates might be higher in the HEALTH AFFAIRS ~ Web Exclusive w679

3 United States. First, higher rates of obesity and, up until the 1970s, smoking place Americans at higher risk for a number of chronic conditions. 9 Second, the U.S. medical system might have a greater propensity to screen for disease more aggressively and treat less severe cases of disease. 10 Previous studies have shown that disease and treatment rates are higher in the United States than elsewhere. A recent comparison of British and U.S. surveys of the population age fifty and older found that U.S. respondents were more than twice as likely as their British counterparts to report having been diagnosed with diabetes and were also more likely to report having been diagnosed with other conditions. 11 Disease-specific comparisons between the United States and European countries have also found that prevalence and treatment rates are higher in the United States. 12 In this paper we examine differences in doctor-diagnosed and medicationtreated disease prevalence between the United States and ten of the largest European countries. We find that both diagnosed prevalence and treatment rates are higher in the United States. We cannot directly calculate the link between higher treatment rates and spending, but we show that U.S. health care spending would be lower if treatment rates were reduced to European levels. Study Data And Methods Data on per capita spending were obtained from the OECD Health Data. 13 Disease prevalence and treatment rate estimates were obtained from the 2004 Survey of Health, Ageing, and Retirement in Europe (SHARE) and the U.S.-based 2004 Health and Retirement Survey (HRS) and the 2003 Medical Expenditure Panel Survey (MEPS). Both the SHARE and HRS are nationally representative samples of the noninstitutionalized populations age fifty and older (including information on spouses if under age fifty) in each country. 14 The SHARE survey was modeled after the HRS survey, which permits direct comparison of obesity rates and prevalence and treatment rates between the United States and the European countries in Detailed descriptions of the HRS and SHARE are available elsewhere. 15 We excluded any adult under age fifty in both surveys, yielding sample sizes of 18,580 HRS respondents and 21,910 SHARE respondents. We calculated respondents body mass index (BMI) from SHARE and HRS using self-reported height and weight. We calculated rates of physician-diagnosed disease ( prevalence for short) for each of ten conditions based on responses to the question, Has a doctor ever told you that you had [this condition]? We calculated the proportion of respondents with physician-diagnosed disease who were taking medications for their condition ( treated prevalence for short) for all conditions except cancer using responses to the question, Do you currently take drugs at least once a week for [this condition]? Neither SHARE nor the HRS asked respondents specifically about medications associated with cancer. For each question, respondents were provided with a list of conditions. We calculated w680 2 October 2007

4 Spending Gap sample means and standard errors using the svymean command in STATA version 8 to account for the complex sampling design. Because the HRS did not ask respondents whether or not they had been diagnosed with high cholesterol and it is not possible to compare diagnosis rates for asthma and osteoporosis across the HRS and SHARE because of differences in question phrasing, we obtained data on prevalence and treated prevalence for these conditions from the 2003 MEPS. We used the same inclusion rules used to define the HRS and MEPS samples, yielding a sample of 7,679 MEPS respondents. For the six conditions for which it is possible to compare prevalence between the HRSandMEPS,theratesfromMEPSwerelowerforallsix,whichsuggeststhat using high cholesterol, asthma, and osteoporosis diagnosis rates from MEPS slightly understates differences between the United States and European countries compared with what we would have observed if these conditions were recorded consistently across the HRS and SHARE data sets. 16 However, treated prevalence rates for one major condition heart disease were higher in MEPS compared to the HRS. As a result, we compared both the MEPS and HRS tabulations with the SHARE/Europe tabulations. 17 Using a sample of MEPS respondents age fifty and older, we calculated condition-specific U.S. spending based on the International Classification of Diseases, Ninth Revision (ICD-9) codes associated with respondents medical events (inpatient admissions, physician office visits, and so on), using methods described previously. 18 We then computed the impact of higher U.S. prevalence rates on aggregate U.S. health care spending using these per case, MEPS-based estimates. Study Results Chronicdiseaseriskfactorssuchasobesityandsmokingratesarehigherinthe United States than in the ten European countries we examined. According to the self-reported data in 2004, 33.1 percent of U.S. adults age fifty and older were obese, compared with 17.1 percent in the ten European countries included in the most current version of SHARE. 19 ObesityprevalenceamongtheSHARE/European countries ranged from a low of 6.6 percent in France to a high of 23.3 percent in Spain. Cigarette consumption, like obesity, is associated with increased risk of a number of the conditions we examined. According to the HRS and SHARE, 53 percent of Americans age fifty and older had smoked or were current smokers, compared with only 43 percent in the European countries. These results are consistent with historical comparisons of U.S.-European smoking patterns. Exhibit 2 presents our tabulations of treated prevalence among the chronically ill. For all but one condition, osteoporosis, prevalence was higher in the United States than in the European countries. For conditions measured in both U.S.- based sources, prevalence estimates were higher than those from SHARE. The prevalence of key conditions associated with obesity, such as heart disease, hyper- HEALTH AFFAIRS ~ Web Exclusive w681

5 EXHIBIT 2 Prevalence And Treated Prevalence In The United States And Ten European Countries, 2004 Prevalence a United States Europe Percent 95% CI Percent 95% CI U.S./Europe difference Heart disease High blood pressure High cholesterol , , , , , , Stroke/cerebrovascular disease Diabetes Chronic lung disease ,9, , , , , , Asthma Arthritis Osteoporosis Cancer , , , , , , , , Obese Current smoker Former smoker Never smoked , , , , , , , , Medication use b Heart disease High blood pressure High cholesterol , , , , , , Stroke/cerebrovascular disease Diabetes Chronic lung disease , , , , , , Asthma Arthritis Osteoporosis Cancer c 81.7, , , c 60.6, , , Treated prevalence d Heart disease High blood pressure High cholesterol , , , , , , Stroke/cerebrovascular disease Diabetes Chronic lung disease , , , , , , Asthma Arthritis Osteoporosis Cancer e 3,3, , , e 2.5, , , SOURCE: Authors analysis of data from the Survey of Health, Ageing, and Retirement in Europe (SHARE) (ten European countries); the Health and Retirement Survey (HRS); and the Medical Expenditure Panel Survey (MEPS) (the latter two: U.S. data). NOTES: U.S. estimates for high cholesterol, asthma, and osteoporosis were obtained from MEPS. CI is confidence interval. a Respondents with physician-diagnosed disease. b Proportion of prevalent cases reporting medication use associated with the condition. c Not available. d Product of prevalence and medication use. e Not applicable. w682 2 October 2007

6 Spending Gap tension, hyperlipidemia, and diabetes, were much higher in the United States. U.S. cancer prevalence (12.2 percent) was more than double the European rate (5.4 percent). Exhibit 2 also shows the proportion of respondents with each disease who were on medications associated with the condition. For example, 21.8 percent of U.S.adultsagefiftyandolderhadbeentoldbyaphysicianthattheyhadheartdisease; 60.7 percent of them were on medications to treat heart disease. The equivalent figures for Europe are 11.4 percent and 54.5 percent. Overall, Americans age fifty and older were more likely than their counterparts in the European countries to receive medications for six of the nine conditions for which medications were recorded. Europeans were more likely to receive medications for arthritis and as likely to receive medications for high blood pressure and diabetes compared with their American counterparts. Finally, Exhibit 2 displays treated prevalence, the product of physician-diagnosedprevalenceandtheproportionofpeoplewitheachconditiononmedications. For example, the prevalence of physician-diagnosed diabetes in the United States was 16.4 percent, and 81.3 percent of people with physician-diagnosed diabetes were taking medications, so the treated prevalence of diabetes among Americans age fifty and older was 13.3 percent (16.4 percent 81.3 percent). Treated prevalence was higher in the United States for all conditions (with differences in treated osteoporosis rates significant at p 0.10), reflecting differences in physician-diagnosed prevalence and, for some conditions, medication treatment rates. We found higher rates of treated prevalence for all of the conditions closely linked to obesity, including hypertension, hyperlipidemia, and diabetes. The higher levels of diagnosed and medication-treated prevalence in the United States both accounted for a portion of the higher level of U.S. spending compared with the European countries. Our findings are consistent with those recently estimatedbymckinseyandcompany. 20 Developing precise estimates of the share of the U.S.-European difference in spending linked to higher diagnosed (and treated) prevalence rates in the United States is conceptually difficult. The key challenge is developing an estimate of the cost per diagnosed case in the U.S. system at the lower diagnosed prevalence rates in the European countries (per capita spending by medical condition is not available for the European sample). Per capita costs in the United States at the lower European rates of diagnosed disease by medical condition could be higher or lower than today s average spending, depending on patients severity of illness treated at the lower rates. To bound these effects, we developed a broad range of estimates, additional details of which are provided in our online technical appendix. 21 Conclusions Our tabulations show that for many of the most costly chronic conditions, diagnosed disease prevalence and treatment rates were higher in the United States HEALTH AFFAIRS ~ Web Exclusive w683

7 than in a sample of European countries in 2004 (the most recent year for which data are available). The high U.S. prevalence of these costly conditions, such as heart disease, cancer, and diabetes, suggests that measures designed to prevent these conditions could yield lower spending in the United States. 22 Indeed, estimates from the Centers for Disease Control and Prevention (CDC) indicate that 80 percent of diabetes, heart disease, and stroke could be eliminated through reductions in smoking and obesity. 23 Based on differences in obesity rates between the United States and Europe (33 percent versus 17 percent), it would seem that at least part of the difference in prevalence rates is attributable to poorer underlying population health status in the United States. A voluminous literature exists highlighting the association between obesity, smoking, and several chronic conditions. 24 Obesity has been linked to diabetes, hypertension, hyperlipidemia, heart disease, depression, back problems, asthma, arthritis, and some forms of cancer. Standardized (for age and sex) rates of total diabetes among obese adults are 14 percent, compared with 4 percent among normal-weight adults. Rates of hypertension are more than double those found in normal-weight adults. 25 A recent comparison of disease rates and physiological measures between Americans and Britons found that Americans are more obese, aremorediseased,andhaveelevatedlevelsofdiseasemarkerssuchassystolic blood pressure, cholesterol, and HbA1c levels. 26 These differences highlight the increased policy rationale for broader, more effective policies aimed at prevention. Another hypothesis about why U.S. diagnosis and treatment rates are higher is that the U.S. medical care system takes a more aggressive approach to detecting and treating patients with mildly symptomatic or asymptomatic disease than is the case in Europe. The case of cancer is illustrative. According to our estimates, the prevalence of diagnosed cancer was 12.2 percent in the United States but only 5.4 percent in Europe in Are Americans really more likely to develop malignant tumors, or are they just screened more intensely than Europeans are? Comparisons of breast cancer screening rates and five-year cancer survival rates suggest the latter. 27 The impact of more aggressive treatment on patient outcomes is important to consider as well. The use of cholesterol and blood pressure medications has increased sharply in the United States over the past twenty years, while hypertension and hyperlipidemia prevalence has declined. 28 Other recent estimates indicate that the additional spending associated with higher rates of medication treatment for hypertension yield overall net reductions in health care spending. 29 Whether more intensive use of medication treatment for other conditions, such as the metabolic syndrome, yields overall reductions in spending remains unknown. Understanding the causes of U.S.-European differences in prevalence and treatment rates and the implications for health are important areas for future research. Americans are more obese than Europeans; compared with Britons, they have elevatedlevelsofdiseasemarkersandriskfactorssuchassystolicbloodpressure, w684 2 October 2007

8 Spending Gap cholesterol, and HbA1c levels. 30 These observations suggest that Americans are, in fact, sicker. At the same time, there are large differences in prevalence rates for cancer, which is not strongly associated with obesity. Our results suggest that differences in both underlying health status and medical practice patterns contribute to differences in diagnosed disease, treated prevalence rates, and the higher rate of per capita spending in the United States. The authors thank three external reviewers for their insights and advice in improving their drafts. NOTES 1. See G.F. Anderson et al., It s the Prices, Stupid: Why the United States Is So Different from Other Countries, Health Affairs 22, no. 3(2003): ; andu.e. Reinhardt, P.S. Hussey, andg.f. Anderson, U.S. Health Care Spending in an International Context, Health Affairs 23, no. 3 (2004): Anderson et al., It s the Prices, Stupid. 3. The macro (cross-country) income elasticity estimates have values exceeding 1; see a summary in T.E. Getzen, Aggregation and the Measurement of Health Care Costs, Health Services Research 41, no. 5 (2006): ; and J.P. Newhouse, Commentary on Getzen s Aggregation and the Measurement of Health Care Costs, Health Services Research 41, no. 5 (2006): Reinhardt et al., U.S. Health Care Spending in an International Context. 5. Anderson et al., It s the Prices, Stupid. 6. Organization for Economic Cooperation and Development, OECD Health Data 2007 (Paris: OECD, 2007). 7. A recent study completed by the McKinsey Global Institute is the one notable exception. See C. Angrisano et al., Accounting for the Costof Health Care in the UnitedStates (San Francisco: McKinsey Global Institute, 2007). McKinsey based its study on proprietary reports from Decision Resources Inc. The McKinsey report includes an Exhibit (no. 9) that shows differences in prevalence rates, with different dots representing different diseases. It concludes that differences in the disease mix and treatment rates account for about 5 percent of the higher U.S. level of spending. Some dots are labeled with a condition, but most are not. Moreover, the McKinsey analysis includes a set of countries in the analysis different from the European countries included in the SHARE data. In particular, they include Japan, a western Pacific country that has among the world s lowest rates of obesity among men (1.7 percent) and women (2.7 percent). See World Health Organization, Obesity: Preventing and Managing the Global Epidemic (Geneva: WHO, 2000), 30. Although we were unable to examine the methodological quality of the Decision Resources findings, we have reservations about some of the comparisons. There are no good data sources with which to compare theprevalenceofconditionssuchasanxietydisorder(oneofthelabeleddotsinthemckinseyreport).another labeled dot indicates that rates of myeloma are lower in the United States, yet data from cancer registries the gold standard for comparing cancer rates contradict this finding. See International Agency for Research on Cancer, Cancer Incidence in Five Continents, vol. 8, IARC Scientific Pub. no. 155 (Lyon, France: IARC, 2005). 8. K.E. Thorpe et al., The Rising Prevalence of Treated Disease: Effects on Private Health Insurance Spending, Health Affairs 24 (2005): w317 w325 (published online 27 June 2005; /hlthaff.w5.317). 9. D.M. Cutler and E.L. Glaeser, Why Do Europeans Smoke More than Americans? NBER Working Paper no. W12124 (Cambridge, Mass.: National Bureau of Economic Research, March 2006). 10. M.J. Quinn, Cancer Trends in the United States A View from Europe, Journal of the National Cancer Institute 95, no. 17 (2003): J. Banks et al., Disease and Disadvantage in the United States and in England, Journal of theamerican Medical Association 295, no. 17 (2006): See, for example, K. Wolf-Maier et al., Hypertension Prevalence and Blood Pressure Levels in Six European Countries, Canada, and the United States, Journal of the American Medical Association 289, no. 18 (2003): Treated prevalence in the United States was 14.8 percent of adults ages 35 64, compared with 11.8 percent in the six European countries and 9.9 percent in Canada. Similar findings are presented in Banks et al., Disease and Disadvantage. Comparisons of data from national cancer registries show that for most tumor types, incidence rates are higher in the United States. IARC, Cancer Incidence in Five Continents. Moreover, WHO estimates of diabetes prevalence in Europe are much lower than those found in the HEALTH AFFAIRS ~ Web Exclusive w685

9 United States (crude prevalence = 7.9 percent), compared to 3 percent in Switzerland, 2.6 percent in the Netherlands, 3 percent in France, and 3.2 percent in Germany. See WHO, Diabetes Programme: Facts and Figures, (accessed 3 March 2007). U.S. diabetes prevalence is from A.H. Mokdad et al., Prevalence of Obesity, Diabetes, and Obesity-Related Risk Factors, 2001, Journal of the American Medical Association 289, no. 1 (2003): Derived from OECD, OECD Health Data 2007, ENG&langs=ENG&sessionid= (accessed 3 March 2007). 14. Data currently available from SHARE include information on Austria, Denmark, France, Germany, Greece, Italy, the Netherlands, Spain, Sweden, and Switzerland. Similar information for Belgium and the United Kingdom will be added in the near future. Our tabulations of MEPS data estimate that approximately 60 percent of total U.S. health care spending is traced to those age fifty and older. Moreover, we estimate that these ten countries accounted for 62 percent of GDP in Europe in See Wikipedia, List of European Countries by GDP PPP, (accessed 3 March 2007). 15. For a description of the SHARE data, see Mannheim Research Institute for the Economics of Aging, Health, Ageing, and Retirement in Europe, April 2005, Documentation/All%20chapters.pdf (accessed 14 September 2007). The HRS sample and data can be viewed at Health and Retirement Study, Documentation Products, 2007, meta/index.html(accessed14september2007).sharewasmodeledafteranddesignedtobedirectly comparable to the HRS; see Mannheim Research Institute for the Economics of Aging, The Survey of Health, Aging, and Retirement in Europe Methodology, September 2005, Documentation/TheSurvey.pdf (accessed 14 September 2007). 16. Differences in prevalence rates between MEPS and HRS are probably attributable to differences in the way in which respondents are counted as having a condition. In MEPS, respondents had to have some service use associated with the condition in By contrast, SHARE/HRS respondents only had to have been told by a physician at some point in the past that they had the condition. 17. The MEPS comparison is displayed in an online technical appendix, available at Thorpe et al., The Rising Prevalence. 19. The self-reported data likely understate the true clinical prevalence of obesity in both the U.S. and European countries. Our tabulations from the National Health and Nutrition Examination Survey (NHANES) that records clinical measures of height and weight among adults age fifty and older indicate that 33 percent of adults met the clinical definition of obesity, compared with 26.7 percent in MEPS and 26.9 percent in the HRS. 20. Angrisanoetal.,Accounting for the Cost of Health Care. 21. See the online supplement, as in Note J.H. Bigelow et al., Analysis of Healthcare Interventions That Change Patient Trajectories (Santa Monica, Calif.: RAND Health, 2005). 23. See G.A. Mensah, Global and Domestic Health Priorities: Spotlight on Chronic Diseases, 23 May 2006, (accessed 14 September 2007). 24. See, for example, Mokdad et al., Prevalence of Obesity ; and A. Must et al., The Disease Burden Associated with Overweight and Obesity, Journal of the American Medical Association 282, no. 16 (1999): E.W. Gregg et al., Secular Trends in Cardiovascular Disease Risk Factors According to Body Mass Index in U.S. Adults, Journal of the American Medical Association 293, no. 15 (2005): Banks et al., Disease and Disadvantage. 27. We are in the process of using survey data to compare cancer screening rates between the United States and Europe. Breast and cervical cancer screening rates are reported in E. Kelley and J. Hurst, Health Care Quality Indicators Project Initial Indicators Report (Paris: OECD, 2006). 28. Gregg et al., Secular Trends. 29. D.M. Cutler et al., The Value of Antihypertensive Drugs: A Perspective on Medical Innovation, Health Affairs 26, no. 1 (2007): Banks et al., Disease and Disadvantage. w686 2 October 2007