The National Institute for Health Care Management (NIHCM) research shows that health care spending in the U.S. is concentrated among a very small proportion of the population. However, there is evidence that spending is starting to spread out among a broader section of the population. Right now, just 1% of the overall population was responsible for 20% ($275 billion) of all personal health care spending in 2009 and about half of all health care spending is on behalf of just 5% of the population.
Among the top 5% of spenders who are non-elderly (i.e., people more likely to be covered by an employer plan), the most common conditions are high blood pressure, mood disorders, high cholesterol and diabetes. For employers, this information shows the importance of prevention and case management. For example, investing in biometric screenings can help employees suffering from these types of chronic conditions to begin managing their condition and their health while they are still healthy. Similarly, reducing or eliminating deductibles for medications used to manage chronic conditions can also be a good investment. Case management programs can help manage the costs and care associated with catastrophic illness and accidents.
Longer term, the report shows some shifts in spending patterns that could be more troubling to employers. Although spending has remained high among the 1% and 5% groups, spending among these two groups has actually become less concentrated as spending has edged up among the rest of the total population. Take a look at the shift:
|1% of the population represents…||5% of the population represents…|
|1987||28% of total health care spending||56% of total health care spending|
|2009||22% of total health care spending||50% of total health care spending|
The report notes: "One explanation offered for this flattening of the distribution is the rise in population risk factors -- most notably, obesity -- and the corresponding increase in treated prevalence for chronic diseases linked to these risk factors, such as hypertension, diabetes and hyperlipidemia. That is, as more people are diagnosed with and treated for these common chronic conditions, a larger share of the population will incur relatively high medical spending."
For employers, this has ominous implications for health benefits costs. If they do not already have biometric screenings for blood pressure, cholesterol levels, triglycerides, blood glucose and so on to help employees identify and manage their health risk factors, this data makes a compelling case that such programs could be a good investment. So can programs that emphasize weight loss, exercise and good eating habits and nutrition.
Smart employers recognize the need not only to identify and manage current health care issues and spending trends but also to look ahead to where health care spending is likely to go in the future.