The Top One Percent Of Patients Account For More Than 25 Percent Of Health Insurance Costs

Health insurance companies are testing ways to provide coverage to the people they have can no longer avoid: working-age people with the biggest medical bills.

The top 1 percent of people under 65 who have private health insurance account for more than 25 percent of health care costs, according to data from the IMS Institute for Healthcare Informatics cited by The New York Times. And when the major provisions of health reform take effect in 2014, health insurance companies will likely have to take on these costly patients. That's because they will no longer be able to turn away customers due to pre-existing conditions, age, gender, or health status.

For the companies, that means coming up with new ways to include this part of the population in their plans while still earning profits. Enrolling millions of younger and healthier people with lower medical costs, almost all of whom will be required by law to obtain some form of health insurance, will help, but the insurers are looking to do more.

The challenge of constraining costs is stark and so is the advantage: Just 5 percent of the U.S. population accounted for 47.5 percent of all spending on health care in 2008, according to a government study. Half of the population spent only 3.1 percent of the money. Total spending on health care reached $2.6 trillion in 2010, an increase of 3.9 percent from the prior year, federal auditors reported last month. That was 17.9 percent of the U.S. gross domestic product. The poor economy and other factors tamped down rising health care costs but they're expected to rise more in the coming years.

Big insurance companies like Aetna, Cigna, and HealthPartners are devising new ways of providing benefits to people with chronic conditions like diabetes and of paying medical providers who treat them, the NYT reports.

For patients, insurance companies can provide assistance navigating the health care system and coordinating their medical services to keep them healthy. Payments to doctors can be tied to their performance helping patients manage their chronic conditions. If these experiments work, it could mean healthier people and slower growth in national health spending.

People who get health insurance from their employers have been protected against rejection or higher premiums under a federal law put in place in the 1970s. This means insurers have experience in managing the medical bills of sicker people and they would like to apply the lessons they've learned to a market that the Congressional Budget Office says will grow by 24 million through 2019. Under the law, individuals and small business will be able to purchase insurance via "exchanges" set up in their home states that will allow them to compare plans on prices and benefits. Lower-income people will be eligible for federal subsidies to help pay for insurance.

Comments

[J Rupel]

12:07 AM on 03/04/2012

"The top one percent of patients..." It'll make a great tweet, because, after all, the 1% is the 1%, and down with the rich, right? What the authors try to tiptoe around is the fact that the "top 1%" really means the "SICKEST 1% account for more than 25% of costs." Not the richest.

[Jennifer Hoffman]

05:05 PM on 02/29/2012

My doctor, who has been in the medical field for over 50 years, said something interesting today. Most hospitals are affiliated with churches and as such are tax exempt. So they rake in hundreds of millions a year that they pay no taxes on. And I just thought the churches were being benevolent by affiliating themselves with hospitals, silly me. I recently had my appendix out, was in the hospital for 20 hours and the surgery was over $50,000, and I had no complications. That's simply absurd. Greed is going to destroy this country and those who have taken all of the money away from everyone else are going to be sitting on their piles of cash with no way to spend it because there will be nothing to buy and no one to impress.

[texdoc96]

06:15 PM on 02/29/2012

How much did the insurance actually pay? The bills are really a joke and have no correlation with what the hospitals actually get paid. All bills by Medicare are paid by drg's that pays a set amount for whatever your diagnosis was. Medicaid pays a daily amount no matter the diagnosis.

[RKey]

06:06 PM on 03/02/2012

I suggest changing doctors because your doctor doesn't know what he or she is talking about. I suggest you do you research into "churches" and "hospitals". Not all hospitals with the identification of ST (abrv for Saint) before its' name is a Catholic or a hospital being run by a religious organization. Plus, those that are associated with a religious order are usually non-profit in accordance with IRS requirements. By the way--buy your own birth control pills I'm not buying them for you.

[DRaymond]

04:38 PM on 02/29/2012

A view from the one percent.

My spouse has Stage IV colorectal cancer.  So you can darn well bet that we are way into that one percent.  And on top of everything else I am supposed to feel guilty that we are taking up more than our 'fair share' of health care costs?  Even though this insurance company made it cumbersome and expensive to get the colonoscopy that might have caught it?  Our for profit insurance system would rather pay for a year or two of chemotherapy for the one percent than colonoscopies for the 99 percent.  Why?  Because there is a good chance that by the time the cancer is found the patient will have changed or lost their job (and be somebody else's problem) or will have retired (and be somebody else's problem too).  The reason why 5 percent of the population takes up 47.5 percent of the costs is that the insurance companies make it as hard as possible for the 95 percent to get any care at all.

[Kenz300]

02:23 PM on 02/29/2012

Insurance companies need to focus on preventive care as a way to reduce long term costs.

[Kenz300]

02:21 PM on 02/29/2012

Obesity leads to heart disease, high blood pressure, strokes and cancer.

Until we deal with the obesity problem in this country we will not reduce our health care bills.

Our food companies need to do more to reduce fat, sugar and salt in processed foods.

Our doctors need to do more to teach their patents about the impact being overweight has on their health.

[Jennifer Hoffman]

05:02 PM on 02/29/2012

Have you noticed that obesity became a noticeable problem about 5 to 7 years ago? That coincides with the timing of Monsanto's introduction of GMOs into our food supply. I believe there is a strong correlation between the presence of genetically modified foods in 90% of US wheat, corn and soy products and the rise in obesity in adults and children. Get GMOs out of the food supply and see if there is a correlating decrease in obesity and food related illnesses, such as allergies and food intolerances. I am sure there will be.

[Hugo Rabson]

12:10 PM on 02/29/2012

Occupy Cancer! ;-p

[intolleft]

11:19 AM on 02/29/2012

The "complete lives system" will take care of those mentioned above

[nothingchanges]

10:54 AM on 02/29/2012

The New One Percent May Cost Health Insurers Big Time

NO..........they won't

They will cost you and me, big time.

The health insurance companies will just pass those costs on to the rest of us, with a large dollop of profit added on.

Net profit.

After they pay their management billions of dollars. Money provided by policy holders.

See that's the problem with our health care insurance industry.

NO ONE is held accountable.

[rybalaw]

09:08 AM on 02/29/2012

As you are aware, the U.S. Supreme court has a 5 man majority appointed by GOP Presidents. You know damn well they will declare the mandatory you buy insurance or else portion of the health care act unconstitutional. The only reason that they wont is that State mandatory liability insurance laws in the Auto insurance area might also get struck down under the same logic.

[MyResponsibility]

10:03 AM on 02/29/2012

You have no idea what you are saying.  There is ZERO relationship between the two insurances.

Compulsory auto insurance coverage is a state issue. Each state establishes minimum bodily injury and property damage liability coverage requirements as it deems appropriate. However, liability insurance provides no benefits to the policyholder beyond the transfer of risk. The auto insurance requirement serves to protect the public from catastrophic losses the insured may cause.

While auto liability is compulsory, drivers aren't required to purchase coverage that protects personal interests. The state isn't concerned with how someone replaces their vehicle or pays personal medical expenses that result from their actions.

Whether liability or collision, the government healthcare advocate still argues that auto insurance is government mandated. This is a half truth. States require drivers to carry liability insurance as a condition of using the public roads. However, there is no actual demand on anyone to buy auto insurance. If a person chooses not to drive a motorized vehicle on the public roadways the auto insurance requirement is inapplicable.

Federally imposed health insurance isn't comparable to a state's auto liability insurance mandate. First, the federal government is forcing us, under threat of fine or possible imprisonment, to buy personal insurance from a private company. Second, you have no viable option to avoid the federal government's imposition. Everyone will be required to carry personal health insurance. Third, congress has no legitimate authority to force free people to purchase products or services no matter the perceived good or value they may bring to the individual.

Suppose government required drivers to carry collision insurance at a government-mandated cost. The financial incentive for safe driving is reduced. While personal expense motivates responsible behavior the opposite is true when consequences are shifted to third parties.

To argue for federal healthcare mandates based on the existence of state auto liability insurance requirements is political sleight of hand. Anyone making that case is banking on public ignorance for their success. Can't fool me.

[missprissanna]

11:37 PM on 02/28/2012

TALLAHASSEE, Fla. -- Florida lawmakers want to keep their health insurance premiums lower than other state workers.

A Senate panel on Tuesday voted down a proposal to force 160 members of the Legislature to pay the same for health insurance as many other state workers.

Currently legislators pay $8.34 a month for individual coverage and $30 a month for family coverage. Rank-and-file workers pay $50 a month for individual coverage and $180 a month for family coverage.

Sen. Joe Negron said legislators should pay the same for health insurance as custodians and people who guard prisoners.

But other senators loudly objected to paying more for health insurance saying they are already giving up time and money to be in the Legislature.

Sen. Gary Siplin, D-Orlando, said that lawmakers are "different from janitors."

Associated Press

http://www.firstcoastnews.com/rss/article/244218/3/Florida-Lawmakers-Say-They-Shouldnt-Pay-More-for-Health-Insurance

Do any of you know of anyone else who gets health insurance for $8.34 per month?

[jordan2]

11:25 PM on 02/28/2012

If you are a student, age 19 to 26, and your parents are on SS, just try getting health insurance in Florida.

In order to compensate for the requirement that students must be included on their parent's policy, all of the major companies here, have already radically increased the rates for other single people. Every single agent from whom I requested a quote confirmed that.

So now, a student working her way through school not only cannot afford coverage, but will also have to pay a fine. Great deal, huh? How is that fair?

Medicaid is not available either here in Florida unless you are pregnant or have children and the school's policy is also out of reach but, even so, has very limited coverage.

I am a 65 year old disabled veteran on regular SS and receive medical benefits from the VA but none of my coverage extends to her.

I have contacted all of my elected officials and they have no explanation as to why this class of people was excluded.

We have a great program here called Healthy Kids in which rates are based upon income but they took my daughter off when she turned 18.

Anyone out there know of any solutions in Florida?

[texdoc96]

06:21 PM on 02/29/2012

The ACA will require that the companies charge the same to everyone for health insurance. So yes young people coverages will skyrocket while 55 to 60 year olds go down. Tranferring money from poorer people to richer people.

[Iimages Soluttions]

08:19 PM on 02/29/2012

Actually, it is the typically equality equation. We have reached a point where it is discriminatory to actually say that older people cost more to insure. In order to make everyone "equal", we are going to let the healthy subsidize the sick. This is seen over and over in how the government handles "special interests". Just remember that when everyone is deemed "special", noone will be

[jordan2]

04:12 PM on 03/01/2012

I see a lot of other problems with the Act. and suspect it will be thrown out.

[oilfield]

11:03 PM on 02/28/2012

healthcare isnt a 10% too high problem.(insurance)...its the 90% that it actually costs..

[ahwhythehellnot]

10:36 PM on 02/28/2012

Tax the fat.

[intolleft]

11:21 AM on 02/29/2012

tax everyone

[Kay Alldone]

07:49 PM on 02/28/2012

"Health insurance companies are testing ways to provide coverage to the people they have can no longer avoid: working-age people with the biggest medical bills." Does this say, there are many working age people with big medical bills who are not currently covered by health insurance; and now the insurance companies need to find ways to cover them?

"The top 1 percent of people under 65 who have private health insurance account for more than 25 percent of health care costs, according to data from the IMS Institute for Healthcare Informatics cited by The New York Times." So 1% of people currently paying for insurance out of there own pocket incur 25% of healthcare costs?

"And when the major provisions of health reform take effect in 2014, health insurance companies will likely have to take on these costly patients."

I am not really sure exactly what this article says, very ambiguous. If these "top 1%" already have private health insurance, I have to wonder if that is because their employment status excludes them from a group plan that may be less expensive. So, they are likely paying more to an insurance company anyway.

"Just 5 percent of the U.S. population accounted for 47.5 percent of all spending on health care in 2008..." So, the majority of the people are contributing to care for these folks while not incurring a lot themselves - what's the problem? We all pay so everyone has care.

[calshana]

11:31 PM on 02/28/2012

I agree - the article is vague. There is no definition of the "privately insured segment" in either the original IMS article nor the HuffPo article.

I think that they mean that 1% of those insured through non-Medicare/Medicaid/Tricare cost 25% - which is generally about how it ends up.And I'm sure that there are some of the 1% mixed in with those that aren't covered now. But all in all - the article doesn't quite make sense since IMS only measures data that it gets directly from insurance companies which is people that have coverage now.

Also, in general, the articles all linked into this one fail to mention that insurers actually re-insure themselves against catastrophic losses so I don't understand the point of the article.

[TomDi]

07:18 PM on 02/28/2012

Ok progressives, this only going to get worse. Now President Obama want's to take benefits from the American Heros of Iraq. It that the change you voted for? I doubt it but who knows you may think this is a great idea.

February 27, 2012
The Obama administration’s proposed defense budget calls for military families and retirees to pay sharply more for their healthcare, while leaving unionized civilian defense workers’ benefits untouched. The proposal is causing a major rift within the Pentagon, according to U.S. officials. Several congressional aides suggested the move is designed to increase the enrollment in Obamacare’s state-run insurance exchanges.

The disparity in treatment between civilian and uniformed personnel is causing a backlash within the military that could undermine recruitment and retention.

[vidtrainer110]

08:27 PM on 02/28/2012

So, when did Obama have the right to determine benefits for workers that work for defense contractors. If he tried to require cuts to their benefits he would be accused of being a socialist. Try making sense....

[sandiegoconservative]

10:42 AM on 02/29/2012

They are not talking about contractors with a secondary employer. They are talking about unionized government workers in defense. In other words, the uniform is the only difference. Are you saying they should be better off than soldiers?

[TomDi]

11:06 AM on 03/01/2012

vidtrainer110, maybe you haven't notice but your dear leader is becoming a mini-dictator and bypassing Congress and the Constitution to get this done that he believes are road-blocked by Congress. He walks all over the Constitution with Obamacare and thinks its ok to force his views on people's religious beliefs (as long as they a not Muslims).

[ichan]

08:42 PM on 02/28/2012

I'm not an expert and don't know how much premiums are going up for military families, but man my premiums have risen nearly every year since I can remember. Only thing I wish Obama did was go all the way to Single Payer and get rid of the for profit insurance monster so all the money could go into improving care and/or lowering premiums. Insurance companies and Wall St. are basically administrators. Why do administrators get paid as much or more than service providers and companies that actually add the value. Both system blow.

[megwright]

09:28 PM on 02/28/2012

We;re rapidly getting to the point that our health care system will collapse and be unable to cover the vast majority of Americans. Then we have two choices - single payer, or the GOP way, letting people go without health care and die of treatable or preventible illnesses.

[alunsulen]

07:14 AM on 03/01/2012

I appreciate the choice in insurance companies. You don't have to use them if you don't want to. Keep the government out of my life.