Persistence of Health Spending by Individuals

I have long been fascinated by the distribution of health spending among individuals.  A few people account for a huge percent of total spending.  A related question is the persistence of health spending, does a high spender in one year stay in that category for successive years?  A new AHRQ brief gives an updated look at the concentration of health, using data through 2022.  Please note that these statistical briefs are often based on survey data, but the results are consistent with other research using actual claims data.  (AHRQ Brief)

In 2022, the top 1% of spenders accounted for 22% of all health care spending.  The top 5% of spenders represented 50% of all spending.  The bottom 50% accounted for less than 3% of all health spending.  The average spend for the top 1% was over $147,000, a little lower than in 2021.  The spending for that bottom 50% was $1390 per year or less.  Now tell me again why those people need full, expensive health insurance?

As you would expect, older persons are disproportionately represented.  The money for the high spending group goes for drugs–a lot of expensive specialty drugs, inpatient hospital stays and some ambulatory services.  The low-spending half of the population receives almost no hospital or home health care.  The high spenders have multiple high-cost chronic conditions with frequent acute exacerbations.  These conditions commonly include hypertension, high lipid levels, diabetes, cancer, musculoskeletal conditions, injuries and anxiety.