1% of US Population Accounts for Over 22% of Health Care Costs

Steven B. Cohen, Ph.D. Director, Center for Financing, Access and Cost Trends Agency for Healthcare Research and Quality Rockville, Maryland 20850MedicalResearch.com Interview with:
Steven B. Cohen, Ph.D.
Director, Center for Financing, Access and Cost Trends
Agency for Healthcare Research and Quality
Rockville, Maryland 20850

MedicalResearch: What is the background for this study?

Dr. Cohen: Health care expenditures represent more than one-sixth of the U.S. gross domestic product, exhibit a rate of growth that exceeds other sectors of the economy, and constitute one of the largest components of the federal budget and states’ budgets. Although the rate of growth in health care spending has slowed in the past few years, costs continue to rise. As a result, an evaluation of the current health care system requires an understanding of the patterns and trends in the use of health care services and their associated costs and sources of payment. Studies that examine the concentration and persistence of high levels of expenditures over time are essential to help discern the factors most likely to drive health care spending and the characteristics of the individuals who incur them.

MedicalResearch: What are the main findings?

Dr. Cohen: Using information from the Household Component of the Medical Expenditure Panel Survey (MEPS-HC) sponsored by the Agency for Healthcare Research and Quality (AHRQ), this study provides detailed estimates of the concentration and persistence in the level of health care expenditures in the United States. Attention is given to identifying the characteristics of individuals with the highest levels of medical expenditures, in addition to those factors that are associated with low medical expense profiles.

In 2011, 1 percent of the population accounted for 21.5 percent of total health care expenditures, and in 2012, the top 1 percent accounted for 22.7 percent of total expenditures with an annual mean expenditure of $97,956. The lower 50 percent of the population ranked by their expenditures accounted for only 2.8 percent and 2.7 percent of the total for 2011 and 2012 respectively. Of those individuals ranked at the top 1 percent of the health care expenditure distribution in 2011 (with a mean expenditure of $92,825), 19.6 percent maintained this ranking with respect to their 2012 health care expenditures.

In both 2011 and 2012, the top 10 percent of the population accounted for 65.3 percent of overall health care expenditures in 2011 (with a mean expenditure of $27,927), and 41.5 percent of this subgroup retained this top decile ranking with respect to their 2012 health care expenditures. Those who were in the top decile of spenders in both 2011 and 2012 differed by age, race/ethnicity, sex, health status, and insurance coverage (for those under 65) from those who were in the lower half in both years.

MedicalResearch: What should clinicians and patients take away from your report?

Dr. Cohen: Health status was a particularly salient factor that distinguished those individuals who remained in the top decile of spenders. Overall, 2.9 percent of the population was reported to be in poor health in 2012, and another 8.1 percent was classified in fair health. In contrast, of those individuals who remained in the top decile of spenders, 21.1 percent were in poor health and another 24.4 percent were in fair health. Furthermore, for those individuals remaining in the bottom half of spenders, only 0.3 percent were reported to be in poor health and 3.9 percent in fair health.

A related analyses has also demonstrated that medical expenditures have been concentrated for the treatment of certain types of highly prevalent conditions or those for which treatment often entails the use of high cost services (e.g. heart disease, cancer, mental disorders, and chronic obstructive pulmonary disease (COPD)/asthma).

MedicalResearch: What recommendations do you have for future research as a result of this study?

Dr. Cohen: As more individuals and households alter their decisions with respect to acquiring health insurance coverage, the take-up of coverage for those newly insured will be accompanied by corresponding changes in their health care access, their use of services and associated medical expenditures. In order to improve upon accuracy, it is essential that future modeling efforts focused on predicting out-year health care expenditure patterns will need to control for the impact of the ACA on healthcare utilization and expenditures.

Citation:

The Concentration and Persistence in the Level of Health Expenditures over Time: Estimates for the U.S. Population, 2011-2012
AHRQ October 22, 2014

 

MedicalResearch.com Interview with: Steven B. Cohen, Ph.D. (2015). 1% of US Population Accounts for Over 22% of Health Care Costs 

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