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Discussion: (6 comments)

  1. I’m not sure what the point is here. That 1% is not a static group of people. $115,000 is the cost you might rack up with a serious medical problem. That’s why insurance exists, so that you can spread the costs of that one or two years you are in the top 1% over the many years when you are not in the 1%.

    1. As I noted in my comment to Dave, you are correct that there is not a huge amount of persistence in the concentration of health spending from year to year. Insurance can help with this risk only if people opt to buy it. Many young people elect to gamble on not having health insurance. Fewer might do so if they were aware of the actual magnitude of the risk they faced. As I note in my reply to SomeGuy, it is not “obvious” that the top 1 percent would average $115K in annual spending. The chart was intended to help illuminate this point.

  2. Unless I’m missing something, this is entirely meaningless. It is very likely that in any one year that a small number of people have catastrophic healthcare issues leading to high cost care. But it is also likely that it will be someone else next year, not the same person. What this really says is procedures like quad bypass are very expensive, nothing more. And it points out the basic flaw in the whole market question: healthcare isn’t just a regular expense, but also a catastrophically high expense for a few random people at a random time, hence the need for insurance. If the point was to try to reduce the cost of the ‘high utilizers’, then you really only have one choice to reduce the cost of high cost procedures, e.g. heart bypass which runs about $150k and up. This is not something you shop for the best price on before having, no matter what your insurance situation is.

    The article makes the point that these people become uninsurable then, which is probably true, because they are likely to continue to need more care than average. But assuming it’s a new fraction of 1% every year, that leads to a population that is much larger than 1% in this category on average.

    1. You are partially correct: on a year-in, year-out basis, only one-quarter of the one-percenters show up as one-percenters in the following year.

      But even ignoring these repeat 1 percenters, there are many more things to do other than merely reduce the cost of expensive procedures. First, ” people in the highest 5 percent of the distribution of medical expenses were 11 times as likely to be in fair or poor physical health as people in the bottom half of that distribution (45 percent vs. 4 percent)”
      Second, trauma is among the top 5 most costly conditions to treat Thus, in addition to encouraging healthier lifestyles, there is much that can be done to prevent automobile accidents or other causes of traumatic injury.

  3. I’m not sure what the point is either. I’d guess that only a small percentage of the population — maybe 1% — is actually in need of extensive critical care in a hospital or massively expensive drugs, and by definition those are the people who are spending the most on healthcare. This chart is like saying that the healthy people spend far less on healthcare than the sick people. Well, of course they do. So what?

    Maybe if the chart had tracked healthcare spending by annual income it would’ve shown something interesting. But a chart saying that the people who spend the most on healthcare spend more on healthcare than those who spend less on healthcare really isn’t terribly enlightening.

    1. It may be intuitively obvious that sick people spend more than healthy people. That said, it is not “obvious” that the top 1% account for 20% of spending–as opposed to 10% or 50%. Likewise, it is not “obvious” that the top 1 percenters average $115K in spending. If their average were only $11,500, for example, then ability to pay for such care would be much less problematic than when the average is more than double the earnings of a typical American worker. What the numbers tell me is that the vast majority of families are not in a position to self-insure a risk of this magnitude. The opposite would be true were the average only $11,500.

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