Health Care Cost Distribution Across the Population

One of the challenges in managing health care costs is the way in which they’re distributed across the population.

According to the Agency on Healthcare Research and Quality, in any year 5% of the population accounts for 50% of health care expenditures, the top 10% of health care users account for 64% of overall spending.  In any given year, 50% of the population accounts for only 3% of overall health care spending.  To put it another way, 50% of the population accounts for 97% of health care spending.  These numbers have been relatively stable since the 1970s.  Half the population is responsible for a negligible portion of overall healthcare spending in any given year.

Who are the 5% that spends half the health care dollars in any year?  They are persons with cancer, heart disease, pulmonary disease, mood disorders, and trauma.

To put it another way, healthcare spending is concentrated on a small portion of the population during any given year.  The problem in managing health care costs whether it’s at a personal level or at the national level is their unpredictability.

We don’t know which persons are going to be in accidents or be diagnosed with cancer or heart disease in any given year.  In our system, even persons without insurance, receive treatment; given the massive costs of the big five, those persons are likely going to not be able to pay the bills.  So they get spread to the rest of us in the least efficient way possible.

Many of the individual plans that have caused the brouhaha about their cancellation don’t meet ACA minimum coverage standards.  That’s why they’re being cancelled.  At a consumer level, they were crappy products – people paid for them and got little for them in return.  The reason the ACA established minimum levels of coverage was simply because people with inadequate health insurance are a lot like people without any health insurance.

  1. #1 by Richard Warnick on November 19, 2013 - 9:46 am

    In “Sicko” (2007), Michael Moore pointed out how the health insurance industry exploits people. The ACA changed some things, but not the unscrupulous nature of the industry.

  2. #2 by utahprogressive on November 19, 2013 - 10:37 am

    Unfortunately, our only Democrat Congressman Jim Matheson votes with the Tea Party extremists every chance he gets. Matheson was one of 39 to vote for the deceptively titled Keep Your Health Care Act that did absolutely nothing to help those with underqualified plans. When will we get real leadership?

    http://www.msnbc.com/the-ed-show/watch/the-39-democratic-missteps-64832579735

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