We all know that high claimants drive healthcare costs, but a recent study of claims data by Kaiser Family Foundation (kff.org) documents some amazing statistics based on a comprehensive set of claims from 2013 (the most recent year for which data was available).
The 80/20 rule applies almost to the penny. The top 20% of claimants account for 82% of total healthcare spending. If we divide healthcare consumers into two groups, we would find that the 50% with the most claims account for 97% of all claims while the 50% with the fewest claims account for only 3% of total spending. This phenomenon makes it difficult for plan sponsors to make decisions based on AVERAGES. For example, average annual spending per patient in the top 5% of claimants is $43,000 while the average annual claims spending for the lower 50% (not a typo) is only $253. 27% of patients have no claims at all.
How does age impact costs? Those 65 or older accounted for 15% of the population, but incurred 29% of the nation’s healthcare claims. An aging population will likely drive future increases in healthcare spending. By 2030, the US Census Bureau estimates that more than 20% of the US Population will be age 65 or older – that’s a big increase (33%) in the demographic category that houses the highest per capita spending. 65+ year old men spent an average of about $9,900 / year. 65+ year old women spent slightly less than men, $9,500 / year. In contrast, men 19-34 years old spent about $1,400 / year on average.
Does insurance matter? YES!!!! The study reveals a dramatic disparity in medical spending between those with and without insurance. It is difficult to say if the difference in spending between the “haves and have-nots” is because healthy people are less likely to buy insurance or if uninsured people are less likely to get the care that they need – or maybe a combination of both. 19-34 year olds with insurance spend an average of $3,000 on medical care annually while those in the same demographic group who don’t have insurance spend less than 20% the amount that their insured counterparts spend.
Plan sponsors can incorporate findings from this study into their plan design choices and cost sharing arrangements. For help in doing so, please contact your CPI-HR benefits consultant, or call 440-542-7800.