Defining the highest spenders in healthcare

Rising healthcare costs are a huge problem in the U.S., though the biggest spenders in the healthcare system are concentrated to a small population.

At least half of healthcare spending in the U.S. is driven by just 5% of people, according to new research from the Kaiser Family Foundation, which reported on the patterns of the highest healthcare spenders. Therefore, the biggest concentration in alleviating healthcare costs should be on this population.

KFF used IBM MarketScan and Commercial Claims and Encounters Database for its analysis, looking at a subset of enrollees with continuous coverage from 2015 to 2017.

Many in this population of high-spenders follow a similar pattern, with very high spending and healthcare utilization over a short illness as well as those with ongoing high costs from one or more chronic illnesses.

Among the most expensive patients––1.3% of enrollees had high spending consecutively from 2015 to 2017––the average cost was $88,000, about 60% higher than average spending for people with high spending than the last year and about 15 times more than the average for all covered enrollees. Together, this group accounted for 19.5% of overall spending in 2017.

Those in this group tended to be older on average by about a decade and had more chronic illnesses.

Those with continuously high spending also spent about 40% on outpatient services compared to those who only had high spending in the last year. This group also averaged about $34,000 in spending in retail prescription drugs­––much higher than other groups. Spending on drugs was about 39% of the total spending for the persistently higher spenders.

The group also was more likely to have one of a couple conditions.

“While those with persistently high spending had a variety of health conditions, a large proportion had claims in the first year that for a narrow set of diagnoses, including HIV, multiple sclerosis, cystic fibrosis, rheumatoid arthritis, as well as a number of cancers,” the report read.

“While not everyone with these conditions has persistently high spending, knowing that there are large shares with persistently high spending within these disease groups helps us better understand where some of the most significant health needs and costs are concentrated.”

See the full analysis here.