Thursday, July 7, 2011

The Five Percent Solution

About 5 percent of the population is responsible for almost half of all health care spending in the United States and for rising premium rates, according to a new report from the National Institute for Health Care Management Foundation.
U.S. health care spending has sharply increased over the past few years. Between 2005 and 2009, national health care spending rose by 23 percent from $2 billion to $2.5 billion, according to the NIHCM Foundation, a nonprofit, nonpartisan organization focused on health care. A foundation report that reviewed the 2008 Medical Expenditure Panel Survey found health care spending was concentrated among a small group of high-cost patients.
The report stated about half of the U.S. population accounted for only 3.1 percent of all expenditures. But 10 percent of the population hogged 63.6 percent of all health spending, the survey found.  The top 5  percent of the population accounted for 47.5 percent of all spending, and the top 1 percent accounted for 20.2 percent.

Unfortunately, the article did not cover what might be done to reduce the cost of care for these 'expensive few'.  We know these folks must be the older part of the population, because about 25% of all spending is spent in the last year of life.  We also know, due to a later quote that half this highly treated population is diabetic or pre-diabetic, that many of these folks have eaten themselves sick - but like smokers, it is hard to discern whether they are more or less costly over their 'life cycle' because they have more illnesses, but live shorter lives.

Any way you slice it, pun intended, the public provision of health care is going to boil down to managing the shortages, and it will satisfy very few but still cost bundles of cash.   "What will the demand for health care if the cost at the point of sale is zero?"

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