Biggest Bucks In Health Care Are Spent On A Very Few

Jan 12, 2012
Originally published on January 12, 2012 9:12 pm

So you know how on Monday the federal government reported that the $2.6 trillion the nation spent on health care in 2010 translated into just over $8,400 per person?

Well, a different study just released by a separate federal agency shows that second number doesn't actually mean very much.

Researchers from the Agency for Healthcare Research and Quality looked at the way people actually spend money on health care. They found that half the population spends practically nothing on health care in any given year, while a very few unlucky people account for the lion's share.

Specifically, in 2009, just 1 percent of the non-institutionalized population accounted for 21.8 percent of all U.S. health spending. And just 5 percent accounted for half the total spending.

Meanwhile, the bottom half of the population accounted for a mere 2.9 percent of total health spending in 2009.

So just who are those high spenders? Sick people, obviously.

But in looking at who remained in that top spending tier in both 2008 and 2009, researchers found that the high spenders were more likely to be:

  • Elderly,
  • Female,
  • White and
  • Covered by public health insurance.

Conversely, those who spent the least were more likely to report themselves as being in good or excellent health and to be younger. They were also more likely to be Hispanic or African-American.

The numbers could have political implications. At the least they help explain why so many people don't understand the health care system. They either don't have health insurance or don't use it if they do.

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One of the biggest issues in this year's presidential elections is going to be health care - who gets it, who uses it, and who pays for it. And we got some new numbers this week from the federal government to help us understand what's at stake. For example, we learned that America spent $2.6 trillion on health care in 2010. That's a little more than $8,000 per person.

But we also learned, in a separate study, that people don't actually spend health-care dollars equally. In fact, half the population uses so little health care that they only account for about 3 percent of the nation's health-care spending.

With us to help process all this, and what it might mean on the campaign trail, is NPR health policy correspondent Julie Rovner. Hello, Julie.


CORNISH: So half the population uses almost no health care in any individual year. So where are all these dollars going?

ROVNER: Well, they're going to do very sickest people. In 2009, the top 1 percent of the population accounted for just under 22 percent of all health-care spending. The top 5 percent of the population spent nearly half of all health-care dollars.

CORNISH: So what do we actually know about those people, other than the fact that they have extremely high medical bills and are probably very sick?

ROVNER: Well, this particular study looked at the people who've stayed in that top part of the spending curve in both 2008 and 2009. And it found that they were much more likely to be elderly, more likely to be women, more likely to be white, and more likely to have public health-insurance coverage. Conversely, those who spent the least were - not surprisingly - more likely to be in good or excellent health but also, younger people, Hispanics and African-Americans.

CORNISH: So what does a study like this mean, politically? I guess, what are the implications there?

ROVNER: Well, whenever we see numbers on overall health spending - and it happened again this week, when we got those spending numbers for 2010 - we tend to see those numbers divided by every person in the U.S. But, of course, as this other study demonstrates, nearly half the population uses little or no health care every year. So that $8,000-a-year number isn't that meaningful.

And we know that a lot of people may not be using health care because they don't have health insurance. But a lot of people may have health insurance and simply are healthy and don't use it - which may be good or bad. Some of them probably should be going to the doctor for preventive care but aren't. In any case, some of those people may be happy with their health insurance because they've never used it, or they've never used it for anything other than very routine or minor care.

It's not really into something major happens that you find out if your insurance is good or not. And it's not until you really need health insurance that you realize how important it is to have. Just ask one of those very high spenders, who average about $90,000 in medical bills per year.

CORNISH: And I'm wondering if these types of numbers also, in some way, explain why the health-insurance industry says it can't cover people with pre-existing health conditions unless everyone is required to have coverage, too. I mean, this is what the individual mandate is all about. And of course, it's incredibly controversial, and under legal review.

ROVNER: That's right. This type of cost distribution is exactly what insurance is built for. Every year, you have a small number of people with very high costs, whose bills are paid by the premiums of a large number of people with very low costs. But if those healthy people don't buy insurance and only the sick people do, then there are no low-cost people to cover the high-cost people's bills.

But whether Congress can require that, of course, is what the Supreme Court will decide later this year. And Republicans, of course, want to repeal the requirement even if the court does uphold it.

CORNISH: So Julie - I mean, what would Republicans like to do instead, given what we've learned from these numbers?

ROVNER: Well, what Republicans say is that they would like to have high-risk pools for people who are sick and have trouble getting insurance. Or they would like to let the states have their own proposals. It hasn't worked up until now, but that's not to say that it couldn't work in some future iteration.

CORNISH: So Julie, essentially, they're arguing that there is no need for an individual mandate.

ROVNER: They're arguing there's no need for a federal mandate; that this should be up to the states to decide.

CORNISH: NPR health policy correspondent Julie Rovner, thanks so much.

ROVNER: You're very welcome. Transcript provided by NPR, Copyright NPR.