Fitch Solutions

Economic Burden Of Chronic Disease In The US To Remain Unparalleled

Financial burdens ultimately borne by society as a whole, while individuals will be disproportionately impacted

New research from Fitch Solutions. Reprinted with permission.

15 Apr 2019 — Aggregate annual costs of the leading chronic medical conditions – diabetes, cardiovascular disease, arthritis, Alzheimer’s disease, obesity, and cancer – in the US exceed $1 trillion dollars. These expenses primarily stem from hospital care, physician visits, pharmaceuticals, medical devices, and home care. This considerable financial burden is ultimately borne by society as a whole, but the individuals affected by these chronic disease will be disproportionately impacted.

Diseases affect economic outcomes through a few pathways. Chronic conditions reduce the supply of labour through diminished productivity, early retirement and premature mortality during working age. Individuals also alter their employment behavior because they anticipate or fear the onset of illness and the negative effects of health conditions. In addition, medical treatments and preventative measures require substantial resources that could have been used for other productive purposes, such as education or infrastructure. Finally, reduced productivity together with a lower labour supply leads to a decline in aggregate income and consequently further reduces savings and investment.

According to the Milken Institute, the total direct costs (medical costs, non-medical costs and research costs) due to chronic diseases in the US totalled $1.1 trillion in 2016, equivalent to 5.8% of GDP. Meanwhile, indirect costs (loss of income and reduced economic productivity) were $3.7 trillion, or nearly a fifth of GDP. As a result of the aging US population, and the concurrent increase in the prevalence of non-communicable diseases, this economic burden is forecast to double within 30 years.

Key View

  • Chronic medical conditions such as diabetes, cardiovascular disease and arthritis present headwinds to US
    economic growth.
  • Pharmaceutical companies and medical device firms that address these medical conditions through value-based
    products will be more likely to secure high prices and favorable reimbursement from payers.
  • As a consequence, more industry stakeholders will adopt health technology assessments and pharmacoeconomics
    in the US.

The total cost of diagnosed diabetes in the US has risen from $245 billion in 2012 to $327 billion in 2017, according to the American Diabetes Association. A patient with diabetes is calculated to incur healthcare costs more than double those faced by a healthy person. Diabetes-related healthcare costs are comprised of hospital inpatient care (30%), prescription drugs for the complications of diabetes (30%), anti-diabetic medicines and medical consumables/devices (15%), physician office visits (13%), and other services/products (11%).

Uninsured patients and those from many ethnic groups are much more likely to be diagnosed with cancer at a later stage, when treatments can be more extensive, costlier, and less successful...

Cardiovascular disease
The direct (hospital visits, drugs etc.) and indirect costs (reduced productivity, sickness absences etc.) of cardiovascular disease in the US are $318 billion and $237 billion, respectively, according to a 2017 report produced by the American Heart Association (AHA). Nearly half of the population (103mn people) has at least one cardiovascular disease (atrial fibrillation, congestive heart failure, coronary heart disease, high blood pressure and stroke). By 2035, the economic burden of cardiovascular disease in the US is forecast to double.

The total arthritis-attributable medical expenditure and earnings losses for the US in 2013 was $304 billion, according to the Medical Expenditure Panel Survey. The employment rate was substantially lower among those with arthritis, highlighting the need for interventions to ensure that patients remain in the workforce. Almost half of these costs were attributed to outpatient care (46%), followed by prescription drug costs (22%), inpatient costs (13%), and other costs such as emergency room costs, home care costs etc. (11%).

Alzheimer’s disease
The Alzheimer’s Association estimates that Alzheimer’s disease and other dementias will cost the US a total of U$290 billion in 2019, and that this figure will more than treble by 2050. While the majority of patients are elderly and no longer in the workforce, more than 16mn people in the US provide unpaid care for people with the condition. People with Alzheimer’s disease or other dementias have twice as many hospital stays as other older people.

According to quantitative systematic review published in 2011, the yearly aggregate national cost of overweightedness and obesity is $114 billion. The annual per capita costs of these conditions is USD266 and USD1,723. The financial burden of obesity is at least 2-3 times greater in the US compared with other developed regions/countries, such as Europe and Canada. Higher obesity classes (such as morbid obesity) are significantly associated with increased costs for medication, general practitioner utilization and work absence.

The direct medical costs for cancer in the US during 2015 were $80 billion, according to the Agency for Healthcare Research and Quality (AHRQ). Cancer is second most common cause of death in the US, accounting for more than 600,000 deaths annually. Uninsured patients and those from many ethnic groups are much more likely to be diagnosed with cancer at a later stage, when treatments can be more extensive, costlier, and less successful. Another significant driver of cost is the high price of recent pharmaceutical innovations in oncology care.



This report from Fitch Solutions Macro Research is a product of Fitch Solutions Group Ltd, UK Company registration
number 08789939 (‘FSG’). FSG is an affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2019 Fitch Solutions Group Limited.