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Thu Aug 2, 2012, 04:20 AM

A comparatively small number of sick people account for most health care spending

National Institute for Health Care Management
The Concentration of Health Care Spending
http://www.nihcm.org/images/stories/DataBrief3_Final.pdf

Spending for health care services in the United States is highly concentrated among a small proportion of people with very high use. For the overall civilian population living in the community, the latest data indicate that more than 20 percent of all personal health care spending in 2009--or $275 billion--was on behalf of just 1 percent of the population. The 5 percent of the population with the highest spending was responsible for nearly half of all spending. At the other end of the spectrum, 15 percent of the population recorded no spending whatsoever in the year, and the half of the population with the lowest spending accounted for just 3 percent of total spending.

The concentration of health care spending has several implications for health policy, particularly as we think about how to control overall spending for health services. First is the obvious need to "follow the
money." With half of the population incurring just $36 billion in health care costs, it simply is not possible to realize significant contemporaneous or short-term savings by directing cost-control efforts at this group.

A second implication of the highly concentrated spending pertains to the acceptance of risk by providers and payers. Emerging payment and delivery system reforms, such as accountable care organizations, rely on integrated provider organizations to accept some degree of risk for a defined patient population. These organizations will need a patient base that is large enough to balance out the sizeable downside risk of attracting just a few high spending cases. Additional risk-adjustment and other means of protection against high-cost outlier cases may also be needed. Similarly, in a world of community rating and guaranteed issue, insurers face a significant risk of adverse selection and negative financial implications if they happen to attract a disproportionate number of high spending patients. Here, too, adequate means of protecting against adverse selection and the risk posed by high spenders are required.


Comment by Don McCanne of PNHP: The healthier half of our population accounts for only 3 percent of health care spending, whereas the top 5 percent was responsible for nearly half of the spending. This study also confirms the 20/80 rule: 20 percent of the population is responsible for 80 percent of health carespending. This concentration of spending is of great importance as we evaluate methods of containing costs.

Perhaps the most significant factor is that cost-containment strategies targeting healthier individuals will have very little impact on total health care spending since so little is spent on this sector in the first place. This explains why the current trend to increase price sensitivity through high-deductible health plans will produce very little savings even though it will act as a barrier to beneficial health care services. Reducing spending by 10 percent in the 150 million people who use only 3 percent of health care will reduce total health care spending by only 0.3 percent - a drop in the bucket of our national health expenditures. It is a small price to pay for being certain that people will seek appropriate care when they should.

What about high-deductible plans for the 5 percent who account for half of our health care spending? The costs for each patient would far exceed the deductibles, thus most care in this group - that provided after the deductible is met - would not be reduced since price is no longer a factor.

The brief mentions problems with other strategies to control costs in populations with skewed concentrations of health care needs. Many strategies under consideration would be ill-advised, both because of the paucity of savings and because of the distortions in access and equity.

We really don't need to look for inevitably-flawed strategies to try overcome these distortions. A single payer system - improved Medicare for all - is an ideal model to cover all appropriate health care expenses no matter how much they are skewed within a population.

My comment: What if the fire department had to be supported only by those people who had fires or other emergencies in any given year? Obviously this is not workable, but for some reason fucking over sick people financially even more than they are already is proposed as a solution to skyrocketing health care expenses.by all too many. Why should we treat a heart attack any differently from a house fire?

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Reply A comparatively small number of sick people account for most health care spending (Original post)
eridani Aug 2012 OP
Scuba Aug 2012 #1
eridani Aug 2012 #2
pnwmom Aug 2012 #14
Major Nikon Aug 2012 #3
joeybee12 Aug 2012 #4
Scuba Aug 2012 #5
mopinko Aug 2012 #10
Scuba Aug 2012 #11
eilen Aug 2012 #16
eridani Aug 2012 #17
Zalatix Aug 2012 #7
eilen Aug 2012 #15
geckosfeet Aug 2012 #6
doohnibor Aug 2012 #9
geckosfeet Aug 2012 #20
doohnibor Aug 2012 #21
geckosfeet Aug 2012 #22
eridani Aug 2012 #18
Festivito Aug 2012 #8
Romulox Aug 2012 #12
eridani Aug 2012 #19
AngryAmish Aug 2012 #13

Response to eridani (Original post)

Thu Aug 2, 2012, 05:33 AM

1. Old news. Care in end-of-life situations is expensive. Think what it cost to keep Terry Schaivo ..

... alive those extra months while the R's did their grandstanding.


If we're willing to just let the elderly and other very sick People die, we can reduce health care costs.

Another way would be to deprive corporate investors in London, Hong Kong and Tokyo the profits they now make on the misery of Americans.

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Response to Scuba (Reply #1)

Thu Aug 2, 2012, 05:40 AM

2. When you slice up the age demographics, the same percentages hold

So it isn't just about end of life care. Most of which happens because they don't know whether the end is near or not. If the patient dies, then it was expensive end of life care. It s/he doesn't then it's just expensive health care.

Expensive chronic illness and accident patchups are more important factors in every demographic slice.

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Response to eridani (Reply #2)

Thu Aug 2, 2012, 10:04 AM

14. It's not necessarily the same people though. We take turns

having our car accidents, our cancer surgeries, our kidney transplants, etc.

In other words, at any given point of time, only a small slice of people account for most of the expenses. But man of the people in that small group are different.

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Response to Scuba (Reply #1)

Thu Aug 2, 2012, 05:45 AM

3. This shouldn't come as a surprise to anyone

What's important to remember is that these things can happen to any one of us at any time. That's why it's important to insure everyone.

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Response to Scuba (Reply #1)

Thu Aug 2, 2012, 05:52 AM

4. Simplistic...most elderly and those who have serious illness can still function

but need a high level of care...you make it sound like the costs are only used to keep them alive, which it is not true....it's to keep them healthy and functioning...see the difference?

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Response to joeybee12 (Reply #4)

Thu Aug 2, 2012, 06:30 AM

5. I did not mean to imply that "the costs are only used to keep them alive"...

... and indeed there are high-cost cases not associated with end-of-life.

But, there is a LOT of data available regarding the increasingly expensive cost of end-of-life cases.

I'm certainly not advocating that we stop caring for these folks.

http://www.reuters.com/article/2010/10/14/us-care-costs-idUSTRE69C3KY20101014



"We end up spending about a third of our overall health care resources in the last year of life," Bergman said. "It represents a huge avenue for improvement."


http://managinghealthcarecosts.blogspot.com/2010/08/end-of-life-care.html

<a href="http://imgur.com/VMtui"><img src="" alt="" title="Hosted by imgur.com" /></a>


Source.

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Response to Scuba (Reply #5)

Thu Aug 2, 2012, 09:16 AM

10. just shine up the crystal ball, and cull the losers?

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Response to mopinko (Reply #10)

Thu Aug 2, 2012, 09:30 AM

11. I'm not into death panels. I would promote hospice care among other things...

One simple thing we could do is help make people aware of the need for putting their own wishes about end-of-life care in writing. Many terminally ill People ask that "DNR" (Do Not Resuscitate) be put in their medical record.

In the absence of such instructions families feel compelled to make sure any and all efforts are made to keep the patient alive, regardless of prognosis, quality of life, etc. I certainly don't blame loving family members for doing that, and it may be what the patient wishes, which is fine.

But I certainly don't want to be kept alive by machines when there is no hope for me to ever enjoy another day on earth and expenses associated with keeping me alive in such a state are wasted.



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Response to Scuba (Reply #11)

Thu Aug 2, 2012, 02:30 PM

16. DNR does not mean Do Not Treat

It means if your heart stops, we let it. Otherwise, you get everything you might need to stay alive and well such as heart surgery, chemotherapy, etc. Many people are just not candidates for surgery d/t many reasons and they are managed medically but given end of life counseling. There are some that want us to try everything anyway, even though it will not cure them=Guinea Pigs for Medical Staff.

Families often feel guilty if they agree to a DNR. They think that it means they don't care for their parent and want them gone etc. There may be some selfish reasons too. That is why it is really important for people to get their EOL documents in order and to appoint people with the ability to make responsible decisions based on what you want rather than what they might want. Writing a Living will, while not legal in all states does unequivically set out your desires for EOL care/resuscitation.

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Response to Scuba (Reply #11)

Thu Aug 2, 2012, 08:24 PM

17. People with terminal illnesses who choose hospice care over

--aggressive treatments actually live longer.

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Response to Scuba (Reply #1)

Thu Aug 2, 2012, 07:09 AM

7. The capitalist solution: let the elderly die

 

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Response to Scuba (Reply #1)

Thu Aug 2, 2012, 02:21 PM

15. Actually, it didn't really cost that much compared to ICU costs.

She was in a sub-acute/chronic care facility, breathing on her own and had a feeding tube. She didn't require constant monitoring, just turn and position every 2 hours, basic adls, and, of course, the tube feedings and whatever meds she was on. No injections, iv's, breathing support etc. She wasn't receiving chemotherapy, wearing a life vest, on a heart monitor, etc. Her care was managed by an RN, supervised by a doctor but most of her care was performed by nurse's aides. She did not appear to be a behavioral/psych/dementia type patient that acted out. The largest burden on the staff was probably the family and their issues. There are lots of people just like her in nursing homes. They are DNR/DNI and are usually treated for infections like aspiration pneumonia, bed sores etc. If they have a heart attack though, they are not coded. The entire situation was high drama about a interfamily feud with a brain-dead girl in the middle of it. I suspect money was at the heart of it.

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Response to eridani (Original post)

Thu Aug 2, 2012, 06:47 AM

6. At some point in our lives, we will all pass through that 5 percent needing intensive care.

It is cyclical and as dependable as the sun in the morning. You will get sick. You may recover, you may die.

What is not as dependable is the availability of health care. With any luck you will be taken care and made comfortable of by professional health care workers, doctors and nurses.

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Response to geckosfeet (Reply #6)

Thu Aug 2, 2012, 08:29 AM

9. Not really

 

You could be like George Carlin, fairly healthy all his life, putting on performances until he turned 71, then, BAM! one day you fall over dead.

There is a lot of statistically erroneous thinking going on in this thread. Observing a Pareto distribution (look it up!) doesn't really mean the researcher is looking for some demographic to oppress. It is a way to focus on what is important. It's only after you ask questions like "why does such a small percentage end up using or consuming such a large percentage" that you begin to figure things out. Once you have good data on these distributions, that's when politics enters the picture: greedy conservatives push the "tough luck, you're on your own" side and liberals answering with "we can take care of the less fortunate among us".

The whole idea of studying the Pareto distribution of something is so that you can solve the biggest part of the problem most efficiently. The distribution in itself runs counter to human notions of fairness and equality, which in itself is a Pareto distribution: the large majority of people believe in sharing and want resources to be distributed equitably. Then there is the 1% who would rather own 40% of the national wealth. What do they do with that wealth? Spend it on advertising to convince a majority that the distribution needs to be MORE skewed, they really deserve more than 40%, they deserve ALL of it.

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Response to doohnibor (Reply #9)

Fri Aug 3, 2012, 07:11 AM

20. BS. Carlin had serious health problems - heart attack in 1978 related to his drug abuse.

But he had the money to buy his way out of it.

Some day you will get old frail and sick (somewhat likely). Or you may drop dead tomorrow (less likely). In any case - you will more than likely need some intensive health care at some point in your life.

People know what a pareto chart is. If you know of a particular distribution to prove your point (which is not entirely clear) then please link to it. In manufacturing it makes sense to get the most bang for your buck. Insurance actuarial tables are kind of the opposite of pareto analysis.

The pareto analysis lumps the healthy majority majority into the 80% - at any given moment they do not need intensive health care. Nothing needs to be done with them. It is the 10% at the tail that we need to focus on in this case. And at some point in your life you will be in that 10%. Do not kid yourself.

PS - I was listening to Carlin before he had his heart attack. And have followed his career for many years. You might want to cherry pick another example.

http://www.time.com/time/arts/article/0,8599,1817192,00.html - Time article - How George Carlin Changed Comedy


Carlin was a product of the counterculture era in lifestyle as well as comedy. His drug use became so heavy in the mid-'70s that it began to affect his health (he had a heart attack in 1978, the start of heart problems that would eventually kill him) and his career as well.

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Response to geckosfeet (Reply #20)

Fri Aug 3, 2012, 08:31 AM

21. You "cherry picked" the example, with your sig line.

 

His heart problems were well known, but they didn't require huge outlays of money the last year of his life. If I wanted to cherry pick a better example, I would have picked my co-worker Stanley, who was out rollerblading one weekend when he had a fatal heart attack. He was 50, didn't see it coming.

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Response to doohnibor (Reply #21)

Fri Aug 3, 2012, 06:17 PM

22. So - is it everyone who doesn't see it coming?

It costs more for intensive care. Most people will need it.

What is your point? That some (minority of) people die suddenly? Even some of them get ambulance transport and some kind of hospital examination in an emergency room before being pronounced dead. Surely that incurs cost.

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Response to geckosfeet (Reply #6)

Thu Aug 2, 2012, 08:27 PM

18. Only one of my grandparents (and neither of my parents)

--had expensive end of life care. One grandfather was in a mental hospital for quite a few years with dementia. Everyone else dropped dead, or died within a few weeks of entering the hospital for the last time.

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Response to eridani (Original post)

Thu Aug 2, 2012, 07:20 AM

8. Take 1% times 80-90-100 years of life.

That would be just as misleading as the article.

We are all concerned about catching virus, bad accident, revealing a difficult gene. Thankfully we don't all have the same problem all at one time or there would be no one there to care for our sick butt.

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Response to eridani (Original post)

Thu Aug 2, 2012, 10:01 AM

12. The fact is, we have Universal Healthcare for those who use the most. The rest of us must pay up

before we can get even basic care for ourselves.

It's not just.

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Response to Romulox (Reply #12)

Thu Aug 2, 2012, 08:29 PM

19. That is otherwise known as risk spreading

The problem is that our political class absolutely refuses to consider putting every single one of us in the same risk pool. All other civilized and industrialized countries do so, which is why their average per capita cost of health care is half of what we pay. Even countries like Rwanda are trying for universal health care with no one left out, ferchrissakes!

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Response to eridani (Original post)

Thu Aug 2, 2012, 10:02 AM

13. So we can call these heavy users the health care 1%?

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