As healthcare costs march upward, health insurance will play an even bigger role in “easing the financial burden” for patients, according to the Health Care Cost Institute (HCCI).
In a New England Journal of Medicine report, the researchers found the top 5% of healthcare spenders in 2015 accounted for 53% of healthcare spending.
However, it’s difficult to predict which individuals will be big spenders. The report said three out of five top spenders in any given year were not top spenders the previous year.
The HCCI studied the distribution of healthcare spending in the commercial insurance market and looked at how spending changed over time. The report analyzed the annual healthcare spending of more than nine million people younger than 65 from 2008 to 2015.
The report found the top spenders are accounting for a growing share of healthcare spending and there is “consistent and substantial turnover” among those spenders. The report found only 39% of the top 5% of spenders in 2015 were the same ones in 2014.
The top 5% of healthcare spending grew from 48% of total spending in 2009 to 53% in 2015. “These new top spenders came from all portions of the spending distribution. For example, in each year studied, almost 15% of top spenders were in the bottom 50% of spenders or had no spending in the previous year,” according to the report.
The turnover of the top spenders show the importance health insurance plans in people’s lives. Without that protection, a previously healthy person could face financial issues if they need many sudden healthcare services. It also shows how a catastrophic plan may make matters worse and not offer enough financial protection. Those bare-bones plans, which the Trump administration would like to expand, offer little coverage. People with catastrophic plans can accrue hefty out-of-pocket costs.
When looking at the top 5%, the researchers found the healthcare costs of the median member of that group was $39,409 in total spending in 2015. The number includes both payer costs and member out-of-pocket spending. The median out-of-pocket burden was $3,850. Payers picked up 90% of the healthcare costs for those in the top 5%.
Though the health insurance plans insulated members from most of the spending increase, the report found that median out-of-pocket spending for the highest spenders in 2015 rose nearly 400% from the previous year.
The new analysis is the latest in a string of reports and studies that show the rising costs of healthcare, as well as out-of-pocket costs. Premiums, deductibles and other out-of-pocket costs are rising in all health plans, both private payers and public programs, and outpacing wage growth in employer-based plans.
Healthcare officials are exploring multiple ways to bend the cost curve. These initiatives include cutting low-value care, narrowing provider networks and moving care to less costly locations. These ideas, along with ideas like value-based care, are seen as ways to reduce costs, but as the HCCI study showed, it’s not always easy to predict which patients will account for the highest healthcare spending each year.