1. Dr. William J. Litchy
Chief Medical Officer
Mayo Clinic Health Solutions-MMSI September 2011
Controlling Future Health Care Costs
It is no secret that health care costs have been increasing at unsustainable rates during recent decades.
Health care spending is projected to grow 5.8 percent every year through 2020; by 2020, health care spending
will grow to 19.8 percent of the United States Gross National Product. Although the Affordable Care Act,
passed in March 2010, is anticipated to reduce the number of uninsured Americans by 50 percent over the
next decade, the cost of health care is projected to be higher than previously predicted. While the new
legislation has already succeeded in reducing the number of uninsured Americans, this reduction has
occurred, in part, as the result of a provision that allows children under age 26 to receive coverage under their
parents’ health care plans.
Drivers of health care costs
In a recent Health Affairs article, the authors discuss the potential drivers of health care costs over the next
decade. They predict that the Affordable Care Act, by expanding Medicaid and private insurance coverage,
will increase demand for health care significantly. Although the overall increase is anticipated to be 5.8
percent per year, in 2014 the increase will be higher--8.3 percent--due to expansion of coverage. There
appear to be three primary drivers of health care costs: hospital services, prescription drugs, and physician
and clinical services. Costs in all three categories are expected to increase, with prescription drugs and
physician and clinical services outpacing hospital services as drivers of costs, at least initially, since the
largest group of the newly-uninsured will tend to be composed of younger people who do not utilize hospital
care as much as the elderly.
The development and availability of sophisticated technologies, such as MRIs, PET scanners, and genetic
testing for diagnosis and management of new treatments, is also recognized as a major driver of escalating
health care costs. In addition, the availability of modern treatments, such as stem cell transplants and
specialty pharmaceuticals, contributes to rising health care costs. It is not the development of these
techniques and treatments that drive the crisis; the issue is utilization (both appropriate and inappropriate).
It is logical to assume that the result of advances in diagnosis and treatment will result in a decrease in
disease burden and an increase in life expectancy. Unquestionably, that has been the case through the 20th
century. Due to these advances:
 hypertension is now better controlled
 incidence of strokes has decreased
 deaths from cardiac disease have decreased
 treatments for some forms of cancer have resulted in prolonging the lives of patients and even some
cures.
What would the national health care costs be without these improvements in treatment of the diseases? How
have these changes affected the predications of future health care costs?
Future projections of disease burden and risk
Unfortunately, recent disease burden projections indicate that trends of reduced disease burden and
increased life expectancy are changing for the worse. The authors argue that the younger population (<45
years old) will experience:
 increased disease burden as they age
 an increased number of several specific diseases
 decreased life expectancy

2. The authors argue that “two-dimensional” forecasts, derived from age-specific health statistics (e.g., life
expectancy) are parochial, relying on past experiences, and reflect the risk factors of the recently deceased. A
“three dimensional analysis,” on the other hand, takes into account the new or different risk factors of people
still alive and attempts to factor in these additional risk factors as well as the time between the start of the risk
factors and the eventual manifestations of the health outcomes.
One such new risk factor is obesity. Incidence of obesity is increasing at dramatic rates, especially in the
younger population. The higher incidence of obesity will impact the disease burden and life expectancy of this
population as it ages and as the complications of obesity take effect. The gains made in diagnosis and
treatment of disease may be negated by the increase in disease burden in the younger population.
National surveys have demonstrated that personal risk profiles have worsened since the 1980’s.
 Autopsy data of people aged 16-64 show that the decline in coronary artery disease in young people
ended in mid 1990’s and that, in the last decade, this progress may be eroding due an increased risk for
obesity in the younger population compared to people born before 1960.
 A recent study found that the probability of a 25 year old being obese increased 30 percent between 1955
and 1975.
 Once thought to be a disease of the middle aged and elderly, Type 2 diabetes is now becoming a disease
of the young. In the past decade, there has been a 33 percent increase in the incidence and prevalence
of diabetes in the American pediatric population, believed to be in part due to a related increase in the
incidence of obesity.
 Stroke rates are also increasing in the younger population, also thought to be due, in part, to the
increased incidence of Type 2 diabetes.
 In people under the age of 35, sudden cardiac deaths have increased more than 10% in the last ten
years.
What are we learning?
The dramatic rise in health care costs is due to many factors, including the disease burden of the population.
Predictions of future health care costs, although staggering, may in fact be too conservative. Many current
projections are based on a “two dimensional” approach to predicating disease based on the risk factors of
people who already deceased, rather than based on a three-dimensional approach that takes into account the
ever-changing risk factors of people who are still alive. In addition, lifestyle-related disorders, particularly
obesity, and the subsequent complications associated with obesity, are driving increases in disease burden,
decreases in the life expectancy, and increases in the cost of health care. The belief that 60-70 cents of every
health care dollar is spent on the treatment of diseases associated with bad life style choices is looking truer
and more daunting everyday.
What should we do?
It is essential that we focus on maintaining health just as much as, or even more than we have focused on
curing disease in the past. Health plans need to encourage healthy behavior and provide tools to encourage, if
not demand, that behavior. Providers must teach and encourage patients to lead healthy life styles. Employers
must actively encourage healthy lifestyles for employees and their families. We must all must do our part in
changing culture, incentives, and behaviors that discourage good health habits.
Mayo Clinic Health Solutions believes wiser consumption of health care benefits will help curb unnecessary
costs while upholding quality of care. Through best-in-class medical, pharmacy, health and wellness
administration services, employers benefit from integrated solutions that provide measurable results, both
clinically and financially. Third-party administration services are provided under the MMSI, Inc. brand.