Cancer Costs Not Outpacing Other Health Spending

As cancer cases continue to rise, medicines are keeping costs in check

As the large baby-boomer generation continues to age, cancer cases are on the rise. Add to that the increased success of cancer treatments, and more people are living with cancer instead of dying from it.

It makes sense then that people are concerned that cancer care could be driving up overall health care spending, especially as insurers are asking patients to pay a higher percentage of the bill than ever before. But cancer care costs have been increasing at the same rate as other health care spending, according to a new study published by the Community Oncology Alliance (COA).

Community Oncology Alliance executive director Ted Okon says that many are surprised that spending for cancer is not rising faster than for overall health care. 

Community Oncology Alliance executive director Ted Okon says that many are surprised that spending for cancer is not rising faster than for overall health care.

Actuarial firm Milliman conducted the study, which looked at Medicare and commercial insurance data from 2004 to 2014. The analysts found that the per-patient costs increased at similar rates for those who did and those who did not receive cancer treatment.

Medicare costs rose 36 percent over the 11-year period for patients treated for cancer, and 35 percent for those not treated for cancer. For commercial insurers, the increases were 63 percent and 61 percent, respectively.

“The results have startled not only the oncologists involved in the study but also outside physicians who have seen the results,” Ted Okon, executive director of the COA, said. “None of us could have predicted this going into the study.”

Cancer Costs Not Outpacing Other Health Spending

The study authors further divided up cancer care costs by treatment type, treatment location and other factors. They found that while spending on biologics rose 335 percent for Medicare patients, these therapies still represented only 9 percent of total cancer care costs in 2014. At the same time, the percentage of cancer care costs that went to surgery and hospitalizations fell 27 percent and 11 percent, respectively. The opposing trends are likely no coincidence; previous studies have shown that new therapies can decrease spending in other health care expenses and reduce overall cancer care costs.

And obviously, these new therapies are also helping patients. Debra Patt, a practicing oncologist at Texas Oncology and a study team member, has noticed the positive impact on her patients firsthand. A decade ago, she told patients with myeloma that they had less than three years to live on average. But with new treatments options, half of patients diagnosed with this blood cancer today are living six years or longer, and some are living up to 10 and 20 years.

They’re expensive therapies, but you have to understand them in context

Oncologist Debra Patt believes using more cancer therapies provides significant economic value and improves patient lives.

Oncologist Debra Patt believes using more cancer therapies provides significant economic value and improves patient lives.

The better prognoses also mean patients may be taking some medications longer. That increases short-term costs, but it does offer a return on investment in terms of patient productivity and reduced hospital and physician fees. “They’re expensive therapies, but you have to understand them in context,” Patt said.

In the context of the COA study, total care spending has actually increased at a slower rate than the number of people who have been diagnosed with cancer. Cancer diagnoses in the Medicare population have increased 16 percent, while spending has only increased 7 percent. In the commercially insured population, the difference is even starker: 39 percent versus 14 percent, respectively.

Cancer Cases Rising Faster Than Costs

For Patt, the take-home message is that cancer care costs are increasing proportionately to other health spending. “We need to look at cancer data continually to better understand where we’re spending our money, and how to work together to design programs to give us better value.”