Individuals with significant chronic and comorbid conditions drive a disproportionate percentage of the health care dollars spent by employers on workplace-based health care benefits. High-cost claimants account for about 20% of participants but about 80% of spending, according to an EBRI fact sheet.
“This matters to employers, who have spent decades trying to control rising health care costs,” EBRI said. Employers have tried changing plan designs, shifting cost sharing and exploring new delivery methods for care, but despite these efforts, the cost of providing health benefits has outpaced inflation almost every year for the past 40 years.
Because spending data is often highly skewed, it is important to consider median spending rather than just mean spending when designing effective health policies, said the report.
EBRI’s analysis notes that the 80/20 rule masks nuances in the data. For example, the 20% of the population that accounts for 80% of health spending are not necessarily high users, said the report. Their average annual spend among that group is $30,000, but median spending is only $15,000 and some people use as little as $6,000 in health care per year.
“This raises a question as to what the threshold should be to define someone as a high-cost claimant or a high user of health care services,” said EBRI.
The research reveals that 1% of enrollees actually account for 29% of spending at an average annual cost of $206,000 per person. Five percent of enrollees account for 57% of spending, while 10% account for 71% of spending, and the top 20% account for 84%of total health spending. Essentially, that means most employees use little or no health care in a given year.
Chronic conditions play a significant role in increasing health care usage and spending. Sixty-one percent of all enrollees in employment-based health plans have at least one chronic condition, and total spending for these enrollees represented 92% of health care spending in these plans. Among the most common conditions were respiratory disease, heart disease, musculoskeletal disorders, skin disorders, mental health disorders and diabetes. About 4% had complex conditions such as liver disease, AIDS, or dementia.