News release: New study projects dramatic rise in chronic disease costs

News Release
December 4, 2017

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New study projects dramatic rise in chronic disease costs

Greater focus on disease prevention needed to help stem rising costs

A new report from the Minnesota Department of Health projects that chronic disease treatment costs for Minnesotans older than 60 will increase to $16.1 billion a year by 2023, a 65 percent increase from the $9.8 billion Minnesota spent in 2014.

This study – the first of its kind conducted by any state – analyzed an extensive state database of health insurance claims to determine the number of people treated for certain chronic conditions: diabetes, hypertension and dementia. It also forecasted treatment costs related to obesity and smoking exposure, as well as all chronic conditions for people 60 or older. 

The study, Treated Chronic Disease Costs in Minnesota – a Look Back and a Look Forward, found that, with the exception of treatments related to smoking, more Minnesotans and a higher percentage of Minnesotans were treated for these conditions in 2014 compared to 2009.

“This is more evidence that Minnesota will not be able to treat its way out of our current primary health challenge, which is chronic disease,” said Minnesota Commissioner of Health Dr. Ed Ehlinger. “Without a strong and continuing focus on preventing and managing chronic disease, both the costs and the impact on the quality of life for individuals and communities will only increase.”

Health care spending directly attributable to these conditions and related health care needs also increased in all areas, a trend that is expected to continue and may accelerate if the prevalence of disease within each age group continues to rise. Though total costs increased, per person costs for diabetes, hypertension and dementia actually fell. Researchers also found that 2014 spending for these conditions was roughly $209 million below what projected trends had expected for that year.

Recognizing the increasing toll of chronic disease, the 2015 Minnesota Legislature directed the health department to analyze costs for select conditions between 2009 and 2014 and to establish a 10-year cost projection. This study is a first of its kind for any state because it focuses specifically on treatment costs – both for public health care programs and private payers – that are directly related to a set of specific conditions, as opposed to examining all health care costs for people with chronic disease. Unlike some other cost studies, this report does not consider other costs associated with illness, such as non-medical costs like lost income or health care costs caused by something other than the underlying condition.

The conditions included in the study were chosen because they represent a considerable disease burden for Minnesotans, are often age-related and in some cases are potentially preventable through improvements in living conditions and lifestyle. The Legislature also directed the health department to focus on smoking and obesity, as these are risk factors for chronic disease.

Key findings of the analysis include:

  • Patients with chronic conditions account for a considerable share of total health spending. This is particularly the case for people 60 or older.
  • Growth in the number of Minnesotans with chronic disease, beyond the impact of aging, drove much of the spending increase.
  • Total health care spending for all conditions rose from 2009 to 2014, even though per-person spending for diabetes, hypertension and dementia actually fell.
  • Between 2014 and 2023, spending for these conditions is expected to increase dramatically. Increases range from roughly 25 percent for obesity to 65 percent for chronic conditions among the 60+ population.
  • Although prescription drug spending has been rising faster than medical spending, the bulk of spending growth is driven by treatment costs in medical settings.
  • Total treatment costs for 2014 were approximately $209 million lower than was expected.

Minnesota managed to decrease health care costs on a per-person basis between 2009 and 2014 for diabetes, hypertension and dementia, though per-person costs increased for smoking and obesity-related treatment. Much of this decline coincided with lower rates of hospitalizations.

Because actual costs for public health care programs were less than what was projected for 2014, the authorizing legislation requires a $50 million transfer from Minnesota’s General Fund to Minnesota’s Health Care Access Fund. The original legislation required the transfer occur if spending by public health care programs on select chronic conditions between 2009 and 2014 dropped by $50 million or more below what had been forecasted for those years. The new study estimated the public health care program spending dropped between $54 million and $68 million as compared to a forecast of spending on chronic conditions for that time period. 

This study was not designed to document why per-person costs increased or decreased between 2009 and 2014, but the report does note some important factors. For instance, more people obtained coverage through the provisions of the Affordable Care Act starting in 2014 –about 250,000 Minnesotans gained coverage relative to 2013 – and this likely resulted in more healthy people holding coverage and receiving earlier diagnosis and treatment for certain chronic conditions. Another factor affecting costs was the slow recovery from the economic recession of the late 2000s.

At the same time, a number of initiatives in Minnesota and nationally could have impacted treatment costs – including health care homes, care coordination initiatives, new payment models such as accountable care organizations, increased focus on quality of care through the Statewide Quality Reporting and Measurement System, and other population and public health investments targeting chronic disease incidence and costs through policy, systems and environment changes, such as the Statewide Health Improvement Partnership. Changes in how diseases are recorded by health providers or accuracy in reporting by health plans could also affect these trends.

The study was conducted using data from a variety of sources including the Minnesota All Payer Claims Database, which includes data from both public and private insurance payers. Minnesota is one of a small number of states to collect health insurance data on such a comprehensive scale and has been a leader in using its database to provide Minnesota policymakers with research findings on disease burden, delivery system efficiency and health care costs trends.


Media inquiries:

Scott Smith
MDH Communications