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High Cost Medical Patients

By June 5, 2023Commentary

It won’t surprise you to learn that a relatively few patients account for a huge percent of health spending.  The Employee Benefits Research Institute puts out a short brief giving some background on these people in the commercial, i.e., employee population.  Among the top 1% in spending, 91% had at least one of the following conditions: heart disease, respiratory conditions, musculoskeletal issues, nervous system disorders (which includes dementia and mental illness) or skin problems.  The last one surprises me.  While routine spending on these diagnoses can get high, it is the acute episodes which drive spending in any one year.  And this 91% of the group also accounted for 91% of all spending in the group.  That is incredibly top-heavy, and this group likely accounts for a huge amount of total spending in a population, probably around 70%,  and is matched by the usual statistic that the lowest 50% of spenders in a commercial population account for almost no spending.  They don’t need insurance.

The average spending for this top 1% was over $200,000.  Half had heart disease.  46% had a respiratory condition.  Over 50% had a nervous disorder and at least one other of these chronic conditions.  If you drop down to the top 2-3% in spending, or the top 5% and so on, you see the same prevalence of a few chronic conditions.  Here is what needs to be done.  We should do away with routine health insurance, provide people solely with a health spending account and information about low-cost, good-quality providers.  When someone hits the top 10% in spending, then they should be enrolled in a health plan charged with effectively managing their care.  This would save immensely on administrative expenses and profits.  And people should be required to engage in good health behaviors, particularly those appropriate for their health conditions, or pay more for their health care or even lose coverage.  Nothing is more unfair than making other people pay for someone else’s irresponsibility.  (EBRI Brief)

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  • James L. Edholm says:

    I understand your point about the small % generating the most cost, but I worry about your suggestion that when they hit the $x mark in claims that they THEN enroll in a health plan. Seems like shutting the barn door after the horse escaped. Rather, one would perhaps be better off by enrolling them in a health plan UPON DIAGNOSIS of one of the high cost diseases.

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