Medicaid, private insurance paying greater percentage of cancer costs

Researchers said the cost of cancer treatment has doubled even as care has shifted to the outpatient setting.

Results from a comprehensive analysis of the change in aggregate cancer costs during the past 20 years showed that the cost of treating the disease has nearly doubled, treatment has shifted from inpatient to outpatient cancer, and private insurers and Medicare are shouldering a greater portion of the costs.

Florence K. Tangka, PhD, and colleagues used data from the 2001 to 2005 Medical Expenditure Panel Survey and the National Medical Care Expenditure Survey, a one-time survey conducted in 1987. Both surveys are nationally representative and capture self-reported data on medical conditions and related expenditures by type and source of payment among patients in the United States. Neither survey included spending for residents of long-term care facilities.

Researchers then used econometric methods to estimate cancer-related expenditures by payer and type of service. All dollar amounts were expressed in 2007 dollars.

The results were published in the journal Cancer.

Compared with the 1970s and 1980s when cancer incidence increased by 1.2% per year, incidence declined by about 1.7% annually from 2001 to 2005. Despite the drop in the number of diagnoses, the total annual expenditures on cancer increased from $24.7 billion in 1987 to $48.1 billion by 2005, an increase of 98%.

However, cancer costs as a percentage of total medical costs remained consistent, 4.8% in 1987 and 4.9% in 2001 to 2005, so researchers said that increase in cancer expenditures matched the overall increase in medical spending.

On the other hand, the change in cancer expenditures differed widely by payer. In 1987, private payers covered 42% of spending on cancer care, followed by Medicare (33%), out-of-pocket expenditures (17%), other public payers (7%) and Medicaid (1%).

By 2001 to 2005, out-of-pocket expenses, including co-pays and deductibles, fell by 7% to $288 million. Medicaid costs increased by 488% to $1.3 billion, costs to private insurers increased by 137% ($13.8 billion) and Medicare costs increased by 99% ($8.1 billion). Costs paid by other public programs increased by 25% to $459 million.

Tangka and colleagues found that the percentage of cancer costs incurred from inpatient procedures dropped from 64.4% to 27.5%. Total real costs from inpatient admissions declined from $15.9 billion to $13.2 billion.

That decrease was congruent with a rise in outpatient costs. Outpatient costs in 2001 to 2005 were $30.3 billion compared with just $7.4 billion in 1987.

A greater emphasis on outpatient care was associated with an increase in prescription drug costs, and private insurers and individual patients picked up most of that cost.

Spending on cancer-related prescription drugs increased from 1.4% to 7% for patients with private insurance and from 5.2% to 27.7% for out-of-pocket payers. Across all payers, prescriptions accounted for 6.1% of all cancer-attributable medical expenditures in the 2001 to 2005 period compared with just 1.8% in 1987.

Tangka FK. Cancer. 2010;doi:10.1002/cncr.25150.