5% of Americans Made Up 50% of U.S. Healthcare Spending

[xchrom]

http://www.theatlantic.com/business/archive/2012/01/5-of-americans-made-up-50-of-us-healthcare-spending/251402/

When it comes to America's spiraling health care costs, the country's problems begin with the 5%. In 2008 and 2009, 5% of Americans were responsible for nearly half of the country's medical spending.

Of course, healthcare has its own 1% crisis. In 2009, the top 1% of patients accounted for 21.8% of expenditures.

The figures are from a new study by the Department of Health and Human Services, which examined how different U.S. demographics contributed to medical costs. It looked at the $1.26 trillion spent by civilian, non-institutionalized Americans each year on health care.

The top 5% of spenders paid an annual average of $35,829 in doctors' bills. By comparison, the bottom half paid an average $232 and made up about 3% of total costs.






*** nationalized health service would go a long, long way to curbing these costs.

[frazzled]

1. A little misleading, since a good portion of that 5% continually changes

Most of us go along for decades without a single major health care expenditure. (We're the ones with the $232 in expenses a year cited in the article). You're paying for insurance (whether through work, private, or Medicare, and using very little.) Then whack, all of a sudden you've got the big kahuna: a complex cancer case, triple-bypass surgery, something that requires nursing-home care for a year or two (maybe a major stroke), a major accident requiring a series of complex surgeries. Some of these people end up dying. Others (say, the person who ends up with $100,000 in medical expenditures for an automobile accident) return to health and don't spend that much in subsequent years.

Am I right? If not, slap me. It's not that some people are overusing expensive medical care. It's that serious, costly medical care strikes a portion of the population on occasion, and a relatively small portion of the population (not always the same portion of the population) will always be needing the big, expensive care.

It seems to me that these kinds of one-year studies don't tell very much. I think you have to look at populations over time.

[PETRUS]

3. My initial reaction was similar.

But the conclusion of the piece reads: "The challenge isn't just about making everybody's insurance cheaper (although that would be nice). It's about figuring out how to cut costs, wisely and fairly, for the disastrously ill and preventing diseases before they become chronic. This is America's 5% problem."

And the OP states: "nationalized health service would go a long, long way to curbing these costs."

It's worth noting that WHO ranks the US healthcare system 37th (or so, I haven't checked recently) in terms of outcomes, and the countries that fare better spend about half the amount per capita. So it's possible to spend less and be healthier. The main impediments to that are politically well-connected, private, profit-seeking industries and interest groups.

[frazzled]

8. I agree with some of the conclusion ... but

The idea that savings can be gotten predominantly from preventive care I'm not sure is proven. Many of these high-cost medical procedures are the result of things that have nothing to do with prevention of chronic disease. Take Gabby Giffords, for instance (a perfectly healthy woman). I can't even imagine what her health-care costs over the last year have been--the result of a gunshot wound. Or my friends' son, who is permanently in a nursing home now after suffering serious brain injury from a fire. Or congenital diseases.

This is not to say I'm against preventive care: I'm all for it. But I'm not sure that chronic diabetes, for instance, accounts for much of those 5% who are costing the 50% of care. Diabetic patients, in general, are probably way down the line for that kind of expenditure.

Maybe Americans have more of these high cost patients because we drive all the freaking time and get in more accidents; or because guns are so much more prevalent in our society, etc.

I still don't get a good answer to where we cut costs for the disastrously ill. If it's gouging on the part of hospitals, etc., then it's easy. But if it's not, then I need more information about how these costs can be cut. I've watched for a year and a half the horrendous (and horrendously expensive) treatment our friends' son has had to get: three months in ICU while in a coma; three months in a brain rehabilitation hospital; since then in a full-time skilled nursing facility, all with surgeries, expensive neurological testing, etc. It's a nightmare, a total freaking nightmare. And I don't know where the costs could be cut for such a thing except to make hospital stays and procedures cheaper somehow.

Health care spending is a huge issue, maybe number one issue, for our economy. And I read the studies and charts and discussions all the time (mostly at Ezra Klein's blog, because it's one of the main subjects there). And I feel more confused about it than ever.

[PETRUS]

9. Regarding costs

I don't know how much could be saved via better preventative medicine either. Nor do I have anything resembling a complete answer about where savings can be achieved. Presumably, a good starting point would be to compare the US system with more successful and more cost effective systems elsewhere. One significant difference is that the US system supports numerous private, for-profit insurance companies (each with it's own bureaucracy ) - a classic example of what economists call "market failure."

Another source of high costs, and one I've spent some time researching, has to do with the pharmaceutical industry. There are a few things people should know about that. First, about half of the research costs are publicly funded, but the patents awarded are privately held. Since a patent is essentially a (government granted) monopoly, and since the "customer" often needs the product, has no alternative, and no leverage for negotiation, the markups are insane - up to 5,000 percent. It's also interesting to note that of the privately-funded research (remember, only about half the total), 60% of that is spent on coming up with "copycat" drugs - i.e. drug company A holds the patent to a profitable medication, drug company B wants in on the action so they spend enormous sums in order to develop something similar. And, of course, huge amounts are spent on marketing...

[frazzled]

10. Yes, the competing for-profit insurance cos., the drugs, but also ...

and this one is too hard to talk about for most people: decisions about end-of-life care.

I've told this story here before, so to make it brief: when my mother-in-law was hospitalized at 95 for an infection, the hospital, which kept her for two full 10-day rounds of antibiotic treatment (which we asked to let the nursing home administer themselves, asking for her to be released to them; but they refused) insisted on doing an EKG, even though the woman had a DNR order, specifically for the heart. It didn't matter what they might find from the test: there was nothing they were supposed to do with it. Take that small story (the average cost of an EKG is $1500; in addition to the 20 days of hospitalization charges) and multiply that by all the end-of-life patients across the nation, and there are obviously some savings to be made.

But who among us wants to say where the line is between acting and not acting when it comes to a beloved parent or grandparent? We usually stick it out to the end, despite the DNRs and acceptance. Perhaps we in the US suffer from an excess of guilt and good intentions in this area. I truly wish the doctors at the hospital would have said to us: let's send her home, there's nothing we can really do for her, she's near the end. They didn't, and though we fought a bit because we thought she would fare better in her known environment with trusted aides, we didn't fight the doctors enough.

[eridani]

12. Preventive care COSTS money--it does not save money n/t

[Yo_Mama]

4. Exactly

The day you are in a major crash, get shot by a nutcase, are diagnosed with cancer, are informed that you have a major syndrome like MS, Huntingdon's, etc puts you into that 5%.

A heart attack? Viral infection of the heart? Bad bronchitis, turns to pneumonia?

All of us are just a split second away from being a "major consumer" of health care. That's what it's there for.

If you're hospitalized for a few days it's going to cost at least 30K.

I really wonder if stories like these aren't structured to get people to think that we shouldn't provide health care to the masses.

[xchrom]

6. yes. i have issues with these studies that include the chronically ill and the elderly.

seriously i can't imagine any nation not having a problem with those 2 groups -- and if you age -- you're going to cross over into both groups.

theres something going on with 'costs' that doesn't have anything to do w/ usage -- but i can't put my finger on it.

[Igel]

11. Of course it constantly changes.

A large majority of the top 5% are elderly. They consume huge quantities of health care in the last year or two of their lives. Then they die and they're replaced by other elderly on the way out.

My mother's on the path to be in the top 5% in the next year or two and probably the top 1% a year after that. She's 84, and won't be drastically sick and a big user of health-care funds for more than a few years, in all likelihood.

There are those who aren't elderly and are transient high-end users, and the few elderly who are very sick and hang in there for a decade.

It's like the top 5% of income earners. A lot of those people are there because of windfall profits in the market or bonuses. My father was in that group when he got his lump-sum distribution upon his retirement.

[dipsydoodle]

2. By the "cost" are you referring to

the cost of the private insurance or the cost of provision of healthcare?

What you find if you had our socialised healthcare/NHS is an increased demand for healthcare due to trivialities and that includes the ambulance services too.

What I doubt you would have are the problems we had with foreigners coming over for free treatment epecially operations on "health holidays" - that's best part shut down now. I'm not talking about when tourists have genuine accidents - that's different.

btw - if you're ever over here we drive on the left which means before crossing the road you look right first : not left.

[Yo_Mama]

5. The top 5% of spenders paid an annual average of $35,829 in doctors' bills.

That's not much, really. Seriously, any normal healthy person could have an accident or get a bad case of the flu and wind up with 35K in health bills one year. You wouldn't even have to be that seriously ill, and you could be completely recovered by the final year.

What that article is really saying is that most of us don't have a serious illness each year, and don't need medical care. No shit, Sherlock.

[rfranklin]

7. Last year of life is the big number in medical expenses....

While only 5 percent of elderly Medicare beneficiaries have died annually, the percentage of elderly Medicare expenditures spent on persons in the last year of life fluctuates between 27 percent and 31 percent.

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1464043/

[eridani]

13. Which is why it should be treated like a public good

Your house is not very likely to catch fire either, but it could. That's why we all pay for the fire department, regardless of whether or not we use the services.

[cbrer]

14. Do you mean to tell me

That we could cut health care costs by 50% by executing our sick, lazy and frail population segment??

For God sakes don't tell Romney!