Projecting the Cost of Vision Loss and Eye Disorders

As with the prevalence of disorders, projecting future costs of vision loss and eye disorders required multiplying annual costs of vision by future population projections. The Cost of Vision report estimated the total US economic burden of low vision and eye disorders based on the 2011 US population estimate in 2013 US dollars. The Cost of Vision report calculated costs by cost category and by payer for the age groups 0-17, 18-39, 40-64 and 65 and older.

Cost categories include:

  • Medical costs
  • Productivity losses
  • Long-term care costs
  • Government program costs
  • Other direct costs, and
  • Deadweight loss

Costs are also reported by payer, including:

  • Patients/family members
  • Private Insurers, and
  • Government payers

Government-only costs also include the budgetary cost of entitlement programs, which are not included in total costs as these are considered economic transfers, not costs.

The Cost of Vision report also reported medical treatment costs for the following disorders:

  • Cataracts
  • Glaucoma and optic nerve
  • Retinal disorder, no diabetes
  • Conjunctivitis, lacrimal/eye lid
  • Retinal disorder, with diabetes
  • Blindness and low vision
  • Visual Disturbances
  • Disorders of the globe
  • Injuries and burns
  • Strabismus
  • Other diagnosed disorders
  • Undiagnosed, self-reported low vision
  • Vision correction costs

An important limitation is that these disorder costs only included medical costs. Costs attributable to low vision were not allocated to specific disorders.

As with the disease prevalence rates, projecting future costs required estimation of per-capita costs by single year of age. For many cost components that were originally allocated to age groups based on vision loss or blindness prevalence, we simply needed to allocate costs by single year prevalence of vision loss or blindness. For other cost such as medical costs, we re-estimated costs on the basis of 10-year age groups, and then used the same process described for eye disorder prevalence to fit a continuous cost function by age and payer. For each cost by category and payer, we calculated per-capita costs based on the 2011 US Census population estimate which was the basis of the Cost of Vision report’s total cost.

Multiplying the per-capita costs by the projected population in each year yields projections in terms of real costs in constant 2013 dollars. However, this will ignore the likely impacts of general inflation, medical cost growth, and wage growth in future years. Controlling for these price increases yields nominal costs, which are the basis of the cost projections reported in this analysis.

Real and Nominal Costs

This analysis provides forecast costs in both real and nominal terms. Real costs are expressed in constant 2014 dollars and show the change in costs over time due to population change, population aging, and projected increases in medical care utilization and healthcare intensity, which refers to the measure of complexity or technology of healthcare services. We also report overall costs in nominal terms, in which costs are adjusted to account for price changes due to general inflation, wage growth, and excess medical cost inflation.

Nominal Cost Inflators

For nominal costs, general inflation and wage inflation projections are based on the 2013 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.[16] This report includes annual projections of general inflation and wage growth. Medical cost inflation is complex, and includes the combined effects of general inflation, excess cost inflation observed in the healthcare sector, increased per-person healthcare utilization rates (driven largely by insurance coverage), and increases in intensity and/or complexity of services (driven largely by increasing standards of care and technology).   For years 2014-2022, we use annual projections of per-capita health care expenditures reported by the CMS Office of the Actuary, which accounts for projected cost changes as well as anticipated impacts of implementation of the Affordable Care Act.[17] However, these projections are only reported through year 2022. Beginning in year 2023, we use the medical cost inflation estimate from the 2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, which assumes a constant annual increase in medical costs of 5.1% based on historical trends.[18]

Real Medical Cost Inflator

Real costs are not adjusted to account for price and wage changes, but should account for changes in medical care utilization and intensity. The Medicare Board of Trustees report calculates a constant 5.1% of per-person medical cost changes, which includes 3.2% total medical cost inflation and 1.9% annual cost increases due to increased medical care utilization and intensity.[18] We calculate annual changes in medical care utilization and intensity by subtracting the 3.2% price change component from our medical inflation estimates, which are based on CMS Office of the Actuary annual estimates through 2022, and the Medicare Trustees’ assumed 5.1% rate in years 2023-2050.[17]

Impact of Real Versus Nominal Costs

The figure below shows the results for projected total costs from vision and eye disorders through year 2050. The solid line represents cost growth in real 2014 dollars, which shows a 257% increase from 2014 to 2050. This increase is due to demographic changes from expansion and aging of the population and projected increases in medical care utilization and intensity. This figure however does not factor in inflation, wage growth or non-demographic changes in healthcare expenditures due to inflation and medical cost growth. The predicted impacts of these cost changes are captured in the dashed line of nominal costs, which shows a 476% increase in costs from 2014 to 2050. Thus, the impact of cost and wage inflation more than doubles the projected increase in costs.

Figure 6.2. Projected Total Costs, Real versus Nominal Costs, $billions

Figure 6.2. Projected Total Costs, Real versus Nominal Costs, $billions
Figure 6.2. Projected Total Costs, Real versus Nominal Costs, $billions