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.
Kevin – I enjoy reading your posts from time to time. Thanks for doing them. The link above points to something other than what you referred to. Any tips on finding the source document?
fixed
“Now tell me again why those people need full, expensive health insurance?”
Well, I have homeowners insurance on which I have never made a claim. And about 2 months of my car insurance premiums covers the one small claim I have made. But I am convinced that I need to pay those premiums, just in case. That is how insurance works.
The link does not seem to have any info on the persistence of high spenders.
I think I fixed the link. The persistence issue is the subject of a separate brief which has not yet been published this year. The past briefs have shown that a fair number of people persist in high spending, but tend to die relatively soon after becoming one.
Health care is not like owning a house or a car. If you own those, you know what the risk is. Most people don’t have a health condition, but are generally forced to buy health insurance anyway. My real point is that a better system for the vast majority of the population would be to not enrich health insurers but to have an on-demand system that pays for non-routine care related to an expensive episode if it occurs.
“a better system for the vast majority of the population would be to have an on-demand system that pays for non-routine care related to an expensive episode if it occurs”
I have no idea what that means. I hope you write a post or posts on it one of these days.
I written several explanations of what I think a better system would look like. I think if you search by terms like “high-spending individuals” or concentration of health spending you would probably find them. I think one was earlier this year or late last year.