Where Are Our Healthcare Dollars Being Spent?

Quite often in the course of working with our clients on practical and innovative approaches to lower their healthcare costs or mitigate pending increases, we are asked two questions:

“Why is healthcare so expensive?” And “where is the money going?”

The first question is so hugely complicated there may not be enough bandwidth on the internet to analyze it and address it in writing. The second question was addressed in a recent study published by the Agency for Healthcare Research and Quality and related in easier to read fashion in a joint Kaiser Health News/Washington Post article.

While this is really big picture stuff, in answering the question on where the money is being spent, they present some interesting (perhaps only to analytical geeks like me) and startling facts worth taking a moment to contemplate:

  • In 2010, Americans spent @ $1.3 TRILLION on healthcare (This addresses direct payments for care provided during the year.  It jumps to $2.8 TRILLION when you include health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care).
  • 1% of the population accounted for 21% of the $1.3 TRILLION spent.
  • 5% accounted for 50% of all healthcare expenditures.  And, 10% are credited with 66% of the healthcare spend.
  • Contrast that with the 50% of the folks in the U.S. that accounted for less than 3% of the costs.

Our BBG world is micro and hyper-intensively focused on helping mid-size and small employers control costs and improve outcomes one employer at a time. We can’t even begin to suggest we know where the big picture solution lies. That’s for folks a lot smarter and better equipped. It does appear clear however, even to this lay person, that to put a dent in this ever growing cost curve, the lion’s share of the resources and efforts must laser focus on solving the 5% accounting for 50% cost equation…

For more on the study or the article, go here:

http://meps.ahrq.gov/mepsweb/data_files/publications/st421/stat421.shtml

And, here: www.kaiserhealthnews.org/stories/2013/october/08/one-percent-of-costliest-patients.aspx



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