The rising prevalence of treated disease: effects on private health insurance spending

Abstract

In this paper we present a new framework for understanding the factors driving the growth in private health insurance spending. Our analysis estimates how much of the rise in spending is attributable to a rise in treated disease prevalence and spending per treated case. Our results reveal that the rise in treated disease prevalence, rather than the rise in spending per treated case, was the most important determinant of the growth in private insurance spending between 1987 and 2002. A rise in population risk factors and the introduction of new technologies underlie these trends.