It's a good news, bad news phenomenon: Americans are living longer. But the longer a person lives, the more apt he is to have a chronic disease — or more than one chronic disease. Medical and technological advances mean less invasive treatments, improved outcomes and better quality of life for people with multiple chronic conditions. But all of that comes with a steep price tag.


That's the conundrum spelled out in the latest Trendwatch report from the American Hospital Association. To put the situation in perspective, the report offers some eye-opening statistics:

  • 10,000 Americans now reach the Medicare eligibility age of 65 every day.
  • About four of five seniors are affected by a chronic condition, such as heart disease, cancer, hypertension and stroke, and diabetes.
  • In 2008, two-thirds of all Medicare beneficiaries had two or more chronic conditions, a number that no doubt will rise over the next couple of decades.
  • The proportion of the Medicare population 85 and older will climb from 5.5 million in 2010 to 6.6 million by 2020.

"An older, sicker Medicare population uses more health care services, including inpatient and outpatient hospital care," the Trendwatch states. "People with chronic disease are more likely to be hospitalized than those without, and the resources required for each episode of care are greater. This translates into higher spending overall."

As an example, the report notes that less invasive options for cardiac care, such as cardiac catheterizations, coronary artery bypasses and angioplasties with stents can be credited with 70 percent of the improvement in the survival rate among heart attack patients during the past few decades. But they also led to an increase in Medicare spending for the average inpatient heart attack case from $10,336 in 1999 to $14,009 in 2006.

Similarly, advances in imaging and medications are responsible for more than two-thirds of the decline in the cancer mortality rate between 1996 and 2006. But the cost of cancer care for a patient 65 or over in the year following diagnosis can exceed $100,000, depending on the type of cancer, and $130,000 in the last year of life.

As CMS has tried to more accurately determine costs of care and control spending, providers have been caught in the middle. In 2008, CMS introduced the Medicare Severity-adjusted Diagnostic Related Groups system to account for the impact of complications and comorbidities on the resources required to care for patients. When the hospital case mix index rose as a result, CMS imposed a series of adjustments that lowered payment rates to providers.

Those adjustments failed to account for the rising acuity of older patients, a trend reflected in an increase in the percentage of Medicare inpatient admissions that included an ICU stay or the increase in the number of people 65 and older presenting at the emergency department and requiring emergent care. They fail to account for the fact that patients with multiple chronic conditions require more complex care management and more intense observation.

The Trendwatch report concludes by urging policymakers to "carefully consider the trends of increasing acuity in the Medicare patient population as they seek changes to payment policy."