Health Insurance

Attached a link http://meps.ahrq.gov/mepsweb/data_files/publications/st354/stat354.pdf to a very interesting federal study titled "The Concentration and Persistence in the Level of Health Expenditures over Time: Estimates for the U.S. Population, 2008-2009" published by the Center for Financing, Access, and Cost Trends of the Agency for Healthcare Research and Quality. Using information from the Household Component of the Medical Expenditure Panel Survey (MEPS-HC) for 2008 and 2009, this report provides detailed estimates of the persistence in the level of health care expenditures over time. Studies that examine the persistence of high levels of expenditures over time are essential to help discern the factors most likely to drive health care spending and the characteristics of the individuals who incur them. According to the study in 2008, 1 percent of the population accounted for 20.2 percent of total health care expenditures, and in 2009, the top 1 percent accounted for 21.8 percent of the total expenditures with an annual mean expenditure of $90,061. The lower 50 percent of the population ranked by their expenditures accounted for only 3.1 percent and 2.9 percent of the total for 2008 and 2009 respectively. Of those individuals ranked at the top 1 percent of the health care expenditure distribution in 2008, 20 percent maintained this ranking with respect to their 2009 health care expenditures In both 2008 and 2009, the top 5 percent of the population accounted for nearly 50 percent of health care expenditures. Individuals who were between the ages of 45 and 64 and the elderly (65 and older) were disproportionately represented among the population that remained in the top decile of spenders for both 2008 and 2009. While the elderly represented 13.2 percent of the overall population, they represented 42.9 percent of those individuals who remained in the top decile of spenders. Focusing on the under age 65 population, health insurance coverage status also distinguished individuals who remained in the top decile of spenders from their counterparts in the lower half of the distribution. Individuals who were uninsured for all of calendar year 2009 were disproportionately represented among the population that remained in the lower half of the distribution based on health care spending. While 15.5 percent of the overall population under age 65 was uninsured for all of 2009, the full-year uninsured comprised 25.9 percent of all individuals remaining in the bottom half of spenders (figure 6). Alternatively, only 3.6 percent of those under age 65 who remained in the top decile of spenders were uninsured. What can we learn from the data and how should the data influence public policy? We are spending a disproportionally high percentage of precious healthcare dollars on a very small percentage of sick people.Most of them suffer from preventable chronic diseases which we still cannot manage properly within our existing healthcare system. The overwhelming majority of those "high" spenders were insured and there annual mean expenditure of $90,061 are not covered by the healthcare premiums they pay. The overwhelming majority of healthy "low" spender are uninsured and therefore do not contribute with their health insurance premium payment to cover for their eventuality of their own care needs. Taking all of these facts into consideration we should support an individual mandate that requires health insurance coverage for each and every American to spread the insurance risk. Spreading the risk assures that as the number of people in a given group gets larger, a company or governmental agency can more easily spread the risk (that would be the risk of a payout) among the pool of participants. They can therefore better estimate the average cost (or payout) per person in the event that one or even several of the group are victims of a catastrophic event. In the absence of such a mandate insurance companies can simply not afford to continue paying 50% of health care expenditures on 5% of the population!!! Alternative proposals to create high-risk pools are doomed to fail because the risk to cover "sick" participants is so high that it results in unaffordable health insurance premiums by private insurance companies. If those companies choose to opt out of providing insurances for such a high-risk pool then the government remains the insurer of the last resort, i.e the tax payer. Yours Bernd