August 3, 2010

Health Care Cost Drivers: Chronic Disease, Comorbidity, and Health Risk Factors in the U.S. and Michigan

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CHRT Issue Brief August 2010

[Revised with minor corrections, including re-numbered figures, on September 24, 2010.]

In the wake of national health reform, health systems, health plans, providers, and policy makers will be discussing what can be done to contain health care costs—within the provisions of reform or beyond them. For that discussion, it will be important to understand that health care spending is not distributed evenly across the population—or by condition. In fact, just five percent of the U.S. population—those with the most complex and extensive medical conditions—accounts for almost half (49 percent) of total U.S. health care spending, and 20 percent of the population accounts for 80 percent of total spending.

Chronic conditions are the leading cause of death and disability in the U.S.1, and treating patients with comorbid chronic conditions costs up to seven times as much as treating patients who have only one chronic condition.2 Modifiable health risk factors, such as cigarette smoking and overweight/obesity, are responsible for much of the illness, healthcare utilization, and subsequent costs related to chronic disease.

In our January 2010 issue brief, The Cost Burden of Disease, we presented the most common reasons for hospitalizations, the most expensive conditions, and gender differences between men and women with respect to the top ten diagnoses. In this issue brief, we focus on costs and risk factors relating to selected chronic conditions, comorbidities, and health risk factors of cigarette smoking and overweight/obesity.

As we collectively seek ways to address the crisis of rising costs—as part of overall health reform or through regional, state, or local approaches—we must understand the factors that drive health care costs and where opportunities exist to affect those drivers.

This issue brief, and our issue briefs on overall costs and the cost burden of disease, are part of a larger report on health care costs, designed to stimulate thinking and further analysis about opportunities for change in health policy, medical practice—even personal health choices—that could lead to more effective and efficient health care spending.

1 Centers for Disease Control and Prevention

2 Agency for Healthcare Research and Quality. Research in Action, issue #19. The High Concentration of U.S. Health Care Expenditures, June 2006

Costs Associated with Selected Chronic Conditions, Michigan

Our issue brief, The Cost Burden of Disease, showed that the top 10 conditions accounted for about one third of the total hospital care charges in the U.S. and Michigan. Heart disease alone accounted for more than $143 billion in charges nationally and $4.2 billion in Michigan—the highest total spending of any single condition. The prevalence of chronic conditions is strongly linked to high expenditures and use of medical resources because these conditions typically require ongoing care and treatment.

Data included in The Cost Burden of Disease reflected hospital charges for all payers and focused on all diagnoses. In this issue brief, we focus on 2008 utilization and spending among the Blue Cross and Blue Shield of Michigan (BCBSM) non-Medicare adult population for seven chronic conditions:

  • Coronary Artery Disease
  • Congestive Heart Failure
  • Diabetes
  • Chronic Obstructive Lung Disease
  • Asthma
  • Mental Disorders (excluding Dementia)
  • Osteoarthritis

These conditions were selected for analysis because they are among the most common and most costly conditions in the U.S. and in Michigan.3 In addition, many of these conditions are at least partially preventable. The Agency for Healthcare Research and Quality’s (AHRQ’s) prevention quality indicators (PQIs)4 identify five of the seven as potentially preventable hospitalizations: coronary artery disease (CAD), congestive heart failure (CHF), diabetes, chronic obstructive pulmonary disease (COPD), and asthma.

In Michigan, these five conditions accounted for approximately half of inpatient expenditures.

In 2008, BCBSM spending directly associated with these seven conditions accounted for fully one quarter of total BCBSM spending.5 Of the seven conditions, the most common for BCBSM were mental disorders and diabetes, accounting for approximately 53 percent of spending on chronic conditions.

Annual health care spending for selected chronic conditions ranged from $1,637 per patient per year for asthma (not including pharmacy spending), to $9,263 per patient per year for congestive heart failure. Total spending for any individual who had at least one visit related to one of the chronic conditions ranged from $10,467 to $41,058, per year. Spending for people who had no visits for these selected chronic conditions averaged $2,788 per patient per year.

Figure IB4:1
Annual Health Care Spending for Patients with Selected Chronic Conditions, BCBSM, 20086


Chronic DiseaseCondition Specific AmountTotal Amount
Congestive Heart Failure $9,263 $41,058
Coronary Artery Disease $4,623 $16,882
Osteoarthritis $2,819 $13,466
Chronic Obstructive Lung Disease $1,637 $12,619
Mental Disorders (excluding Dementia) $2,828 $11,101
Diabetes $2,091 $10,491
Asthma $1,797 $10,467
No Selected Chronic Conditions $2,788

Patients by Number of Chronic Conditions, Michigan7

Comorbidity is defined as the occurrence of one or more conditions in the same person.8 For example, patients with diabetes often have co-occurring conditions, such as depression or musculoskeletal disease.9

In 2008, 6.7 percent of the continuously enrolled BCBSM commercial population had two chronic conditions, and 2.4 percent had three or more chronic conditions.

Though they represent a small percentage of the total population, members with chronic conditions accounted for almost 64 percent of total BCBSM spending.

Figure IB4:2
Patients and Costs by Number of Chronic Conditions, Ages 18–64, BCBSM, 2008


Number of Chronic Conditions % of total patients % of total spending
0 65% 36%
1 26% 34%
2 7% 17%
3 or more 2% 13%

3 Healthcare Cost & Utilization Project (HCUP), 2007.


5 Data Specifications: Continuous enrollment, Age 18-64, Non-Medicare, Michigan Membership, Members with Pharmacy Benefit Coverage, Limited to claims with condition-specific diagnoses as primary or secondary (multiple) Pharmacy claims are not included (diagnosis not available on pharmacy claims) Source: BCBSM OSCAR

6 Condition-specific spending represents payments made for medical claims with an ICD-9 code for that condition, and does not include pharmacy data. Total spending is payments for all medical and pharmacy claims for any individual who had at least one claim related to the chronic condition. Some of the spending in “total spending” could be pharmacy spending related to the chronic condition. The members represented in each category are not unique—if someone has both diabetes and asthma they will be counted in each category.

7 Data Specifications: Continuous enrollment; Age 18–64; Non-Medicare, Michigan Membership; Members with Pharmacy Benefit Coverage; Includes all claims paid for members within each condition category regardless of diagnosis. NOTE: Patients are unique to each category. Source: BCBSM OSCAR

8 Ann Fam Med. 2009 July; 7(4): 357–363. doi: 10.1370/afm.983.Defining Comorbidity: Implications for Understanding Health and Health Services Valderas, J. M.MD, PhD, MPH, et. al.

9 BMC Health Serve Res. 2006; 6: 84.Published online 2006 July 4. doe: 10.1186/1472-6963-6-84. Comorbidity in patients with diabetes mellitus: impact on medical health care utilization. Jeroen N Struijs,1 Caroline A Baan,1 Francois G Schellevis,2 Gert P Westert,1 and Geertrudis AM van den Bos

Costs for Patients by Number of Chronic Conditions

In 2008, spending for BCBSM patients with two chronic conditions averaged $13,146 per patient per year, twice as much as those with only one condition ($6,573 per patient per year). At $27,763 per patient per year, spending on patients with three or more chronic conditions was four times the level of spending for patients with one chronic condition.

Figure IB4:3
Patients and Costs by Number of Chronic Conditions, BCBSM, 2008


Number of Chronic Conditions Average Amount per Person Per Year
0 $2,788
1 $6,573
2 $13,146
3 or more $27,763

Health Risk Factors

The main risk factors for chronic diseases are well established. Cigarette smoking and overweight/ obesity, in conjunction with the non-modifiable risk factors of age and heredity, explain the majority of new events of heart disease, chronic respiratory diseases, and diabetes.10

Cigarette Smoking Related Health Care Expenditures, U.S and Michigan, 2008

In 2004, Michigan spent about $3.3 billion on health care attributable to smoking—approximately seven percent of overall health care expenditures in the state.

Figure IB4:4
Cigarette Smoking Related Health Care Expenditures, U.S and Michigan, 2008 (in millions of dollars)

State Ambulatory Hospital Prescription Drugs Nursing Home Other Total
United States $15,566 $48,694 $15,480 $8,492 $7,714 $95,947
Michigan $448 $1,780 $579 $240 $258 $3,306
Source: Smoking-Attributable Mortality, Morbidity, and Economic Costs, Centers for Disease Control and Prevention, 2004 (

Michigan’s smoking rate is, and historically has been, higher than the national rate. While the smoking rate for adults in the U.S. and Michigan has been slowly declining over the past decade, the rate remains high, and Michigan, at 20.5 percent remains higher than the national average of 18.4 percent.

Figure IB4:5
Adult Smoking Trend, U.S. and Michigan, 1999–2008


  1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Michigan 25.1 24.1 25.6 24.2 26.1 23.3 22.0 22.4 21.1 20.5
United States 22.8 23.2 23.2 23.2 22.0 20.9 20.6 20.1 19.8 18.4

In 2008, Michigan ranked 16th highest among the 50 states and District of Columbia on the percent of adults who smoke.

Figure IB4:6
Percent of Adults Who Smoke, State Comparisons, 2008


Source: Behavioral Risk Factor Surveillance Survey, Centers for Disease Control and Prevention.

10 Chronic diseases and their common risk factors. World Health Organization, 2005

Obesity-Related Health Care Expenditures

Over the past decade, the prevalence of overweight and obesity has increased for both adults and children in the U.S. and Michigan. In 2008, 65 percent of adults in Michigan were overweight or obese, slightly above the national rate of 63 percent. The percent of adults in Michigan who were obese increased from 22.8 percent in 1999 to 29.5 percent in 2008.

In 2006, average U.S. health care expenditure for people who were obese was $5,148, compared to $3,636 for those who were overweight and $3,315 for people who were normal weight.11

According to one study, Michigan spent 6.5 percent of its health care expenditures, or $2.9 billion, on obesity-related health expenditures in 2003.12

Figure IB4:7
Overweight and Obesity, Adults, U.S. and Michigan, 2008


  Neither overweight nor obese Overweight Obese
Michigan 35.3 35.2 29.5
United States 36.7 36.5 26.7

Figure IB4:8
Adult Obesity Trend, U.S. and Michigan, 1999–2008


  1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Michigan 22.8 22.4 25.0 25.4 25.2 25.4 26.2 28.8 28.2 29.5
United States 19.6 20.0 20.9 21.9 22.9 23.2 24.4 25.1 26.3 26.7

In 2008, Michigan ranked 9th highest among the 50 states and District of Columbia on the percent of adults who are obese.

Figure IB4:9
Percent of Adults Who are Obese, State Comparisons, 2008


11 MEPS Statistical Brief 247, mepsweb/data_files/publications/st247/stat247.shtml

12 EA Finkelstein, IC Fiebelkorn, G Wang. State-Level Estimates of Annual Medical Expenditures Attributable to Obesity. Obesity Research. Vol. 12 No. 1 January 2004


Suggested citation: Ehrlich, Emily; Kofke-Egger, Heather, Udow-Phillips, Marianne. Health Care Cost Drivers: Chronic Disease, Comorbidity, and Health Risk Factors in the U.S. and Michigan. August 2010. Center for Healthcare Research & Transformation. Ann Arbor, MI.