National health spending is remarkably concentrated. A corollary of this concentration is that most people have little health expense. A recent Health Affairs article reviews the data and research over a period of several decades. (HA Article) LISTEN TO THIS FACT, IT IS VERY IMPORTANT! From 1977 to 2014, the bottom 50% of the population in health spending accounted for a total of only between 2.7% and 3.5% of all spending. In 2014 the bottom 75% represented only 13.4% of all spending. The top 1% over this 37 year study period always accounted for more spending than the bottom 75%!! Low spenders are obviously younger and report better health status than higher spenders. 38% of those in the top 1% of spending are over 65. A much higher percent of low spenders don’t have health insurance, even after the passage of the reform law. And this appears to be because they don’t think they need it, not because they can’t afford it. Due to low health needs, many of these people also report not having a usual source of care. But they report less of an issue accessing care when they feel they need it than do the high spenders, and the top 1% report the greatest perception of unmet health care needs. In this analysis, low spenders were defined as the bottom half of the population in spending. They reported an average of only $75 per person in annual out-of-pocket health spending n 2014, and half of them reported no spending!!
I made this point earlier in the year. It is time to move away from a system which views health insurance or third-party payers as the primary method of paying for health care for most people. The great majority of Americans don’t need health insurance. Insisting that they have it just generates an enormous amount of administrative and margin expense. We should require people to have, and incent the use of, savings accounts that grow and provide a source of funds for routine health spending. For most people, those savings would pile up over the years and then be available for use for bigger health needs. And when people encounter a significant and expensive health episode that they don’t have funds for, then government can step in with funding and the management of the episode can be put out for bid to or assigned to organizations, provider-sponsored or otherwise, who will be at risk for the cost of the care and who will be empowered to manage it efficiently. This would be a far less costly system.