The Fi ve Percent

A recent study found that about half of U.S. health care expenses are incurred by just five percent of U.S. patients. These 2009 figures were just released in a data brief by the nonprofit National Institute for Health Care Management Research Foundation. The data brief found that the U.S. spent an average of $8,086 per person on health care in 2009, almost twice the $4,166 per-capita cost in 1997. Ranked by expense, the top 5% of patients (civilian and non-institutionalized) cost a mean of $35,820 per year, and the top 1% of patients cost $76,476 per year in 2009, according to the brief.

Who are these high-cost patients, the five percent? The brief stated that they tend to be 55 or older and have at least one chronic condition. (I've read elsewhere that  patients with chronic conditions consume 75% of the health care budget.). Many of them have hypertension, high cholesterol, or diabetes. Increasing obesity rates are driving the increase in many costly chronic conditions.

Other factors are also driving up health care costs. These factors include costly new medical technologies, the increased use of defensive medicine to avoid malpractice suits, and economic incentives such as fee-for-service payments that discourage adequate management of chronic conditions, according to the brief.

The brief did not have any suggestions about how to curb health care expenses. Clearly, the rate of chronic conditions in the U.S. is one of the roots of the problem (although other reforms are also needed in the health care system). But the time and energy it takes for an individual to prevent or adequately manage a chronic condition are at odds with our culture, which rewards unhealthy workaholism and weakens the community ties that can foster healthy choices.

Don't Get Sick if You're Middle Class

The American middle class, created in large part by the G.I. bill after World War II, is suffering especially acutely in the current economy. A study in the journal Family Relations, for example, found that middle class shoppers are increasingly going to thrift shops and yard sales to buy basics they need such as clothes and small appliances.

Freecycle, an organization through which people give away or request household items, is growing in popularity; online coupon sites are everywhere. The only group that seems to have plenty of disposable income in this economy are childless young women.

But where can middle class families find the bargains in health care? The Census Bureau recently released a study that found that the number of people without health insurance rose from 46.3 million in 2008 to 50.7 million in 2009. Half of this increase is among people with incomes over $50,000 per year, who have limited access to government help with health care costs, as a Commonwealth Fund study pointed out recently.

Here in California, where unemployment tops 12%, health care is excruciatingly expensive. This is especially true in the San Francisco Bay Area, as Andrew Van Dam pointed out in a recent Covering Health blog post. For patients without access to government assistance, hospitals in some parts of the Bay Area bill about $35,000 per inpatient (versus about $19,000 per inpatient in Los Angeles County). Here's a Kaiser Health News map that lays out the statistics.

Health care reform helps, but the insurance exchanges that should provide affordable insurance options to those without good coverage aren't legislated until 2014 (although California is trying to fast-track that process in the state). Meanwhile, people who are uninsured or under insured are left to consult Dr. Google if they get sick. At least the doctor is affordable and always in, if not always right.

More Fees, Less Health

With open enrollment coming up, Kaiser Health News' Michelle Andrews wrote an interesting article about how health insurance costs may increase for consumers with the new health care reforms in place. The potential costs, which will especially impact people with family coverage, include:

• Higher premiums and deductibles. Employers and insurers are passing on greater amounts of the cost of health insurance to their employees. "In the past five years, employees' premium contributions have grown 47 percent, while overall premiums increased 27 percent," wrote Andrews. Furthermore, over 25% of employees pay $1,000 or more in an annual deductible that must be paid before the insurer picks up any costs.
• Both co-pays and co-insurance. In addition to small, flat rate co-pays to visit doctors, some health insurance plans will also require people to pay a percentage of the total bill (co-insurance) for hospital stays, ER visits, and/or prescription drugs. Co-insurance is usually about 10% to 30% of the bill, according to a New York Times article on insurance changes.
• Surcharges for dependents. Some insurers will charge extra for each dependent on a plan. Other insurers might charge a surcharge for employed spouses who have access to other insurance through their employers, hoping to drive them off the family plan.

These extra fees seem especially painful in light of a recent Commonwealth Fund study that found that Americans are faring worse in health outcomes than their counterparts in other countries. The 30-year study looked at health care costs and 15-year survival rates for 45-year-old men and women and for 65-year-old men and women, in the United States and in twelve other wealthy nations.

"The United States now spends well over twice the median expenditure of industrialized nations on health care, and far more than any other country as a percentage of its gross domestic product (GDP)," wrote the study's authors, Peter A. Muennig and Sherry A. Glied, in the journal Health Affairs. Although U.S. survival rates have improved during the study time (1975 to 2005), the improvements were greater in the other countries in the study.

The study looked at the impact of population diversity, smoking, obesity, traffic fatalities, and homicides on the health of Americans, but found that these factors did not contribute significantly to the health differences between the U.S. and other countries. Instead, the authors concluded that the high cost of health care might be making the U.S. fall behind the other countries. For example:

• High health care costs have made insurance unaffordable for many Americans. The number of uninsured Americans rose during the study period, and going without health insurance affects both short-term and long-term health.
• High health care costs might divert money from important public health campaigns. "At current spending levels, investments in public health, education, public safety, safety-net, and community development programs may be more efficient at increasing survival than further investments in medical care," the authors wrote.
• Expensive fee-for-service care and the rise of specialized care might lead to unnecessary procedures and poor communication between a patient's different health care providers. Complications from unnecessary procedures and medical errors from poor communication might contribute to Americans' poor health outcomes.

Ideally, health reform will ensure that more Americans have health insurance, create incentives to support public health programs, and reward the medical community for focusing on cost-effective, coordinated preventative care. If consumers become healthier because of these initiatives, insurers will save money on treatment costs. But since we're not there yet, insurers still view Americans as unhealthy and costly, and will continue to charge them heftily for that.