Health spending is very concentrated among a small portion of the population, with 50% of spending focused on the top 5% of spenders in any one year.
With so much spending concentrated among a few very sick people, efforts to control costs must inevitably address providing care more efficiently to those individuals. Yet, that requires knowing who those individuals will be in advance so that their care can be better managed and coordinate.
A recent study examines how persistent high health spending is from one year to the next, and the results are mixed.
Using Truven Health MarketScan data for 2003 to 2008, researchers analyzed the persistence of health spending by the privately insured under age 65. On the one hand, just 43% of people in the top 10% of spenders had high spending in the following year, meaning that high spending in one year is not a perfect predictor of high spending in the future. Yet, there was little drop off after the second year, with 34% of high spenders in year one still among the top 10% of spenders five years later. Persistent high spending was particularly pronounced for certain chronic diseases such as rheumatologic conditions, renal disease, diabetes, and AIDS.
As the authors note: “The concentration of long-term medical spending documented in this study supports the use of disease management, particularly for those with the conditions that remained strong predictors of high spending throughout the 5-year follow-up period.”