Given thewide gap between average spending for chronic conditions and theaverage employee, understanding and managing such costs is a vitalpart of improving the U.S. health care system. (Photo:Shutterstock)

A recent Kaiser Family Foundation (KFF) study puts new numberson the old axiom that a relatively small amount of people accountfor a high percentage of health care spending. The KFF analysis focused on health care costs forpeople enrolled in employer-based plans of large companies over athree-year period; from 2015 to 2018.

For people in these large employer plans, 1.3 percent ofenrollees accounted for 19.5 percent of overall health spending in2017, the study found. The report said that people in the top fivepercent of spending in each of the three years from 2015 to 2017had average health spending of $87,870 in 2017. That compared toaverage per-person spending of $5,870 among all large groupenrollees during that period.

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“People with high health care spending are not a homogeneousgroup: some have very high spending during a short spell ofillness, while others have ongoing high spending due to one or morechronic illnesses,” the report said. “Thepatterns and types of medical spending also vary among thesehigh-need patients: for example, those with acute spells of illnessare more likely to have high hospital spending while those withchronic illnesses spend more on outpatient services andprescriptions.”

Noting the wide gap between average spending for these withthese costly conditions and the average employee, the report saidunderstanding and managing such costs is a vital part of improvingthe U.S. health care system. “The predictability and extent of[this group's] spending suggests that any efforts to reduce thetotal costs of care and improve health system quality must focusheavily on this group of people.”

Identifying the conditions associated with high spending

People who develop any serious health problem can increasehealth care spending—for example, the study looked at those who hadhigh health spending just for one year (2017) and found theiraverage costs were $55,670—nearly 10 times higher than the $5,870yearly health care spending for all covered enrollees onaverage.

But the $87,870 spent in 2017 for members with persistently highcosts over time represents by far the biggest price tag for payers.Just a handful of conditions account for the bulk of this spending:HIV infection, cystic fibrosis, and multiple sclerosis are theconditions most clearly associated with high spending over multipleyears.

“The odds of having persistently high spending were about 259times higher for a person with HIV as compared to a person withoutHIV, all else being equal. Cystic fibrosis and multiple sclerosisincreased the odds of having persistently high spending 243 timesand 206 times respectively,” the KFF report said. “While thesethree conditions had the biggest impacts on the odds, having any ofseveral other illnesses or conditions, such as regional enteritisand ulcerative colitis, rheumatoid arthritis, leukemia and multiplemyeloma, also greatly increased the odds of having persistentlyhigh spending.”

Prescription drugs = much higher costs for some members

Not surprisingly, those with just one year of high costs tendedto have high inpatient costs; those with longer-term conditionsspent more on outpatient care and on prescription drugs, the studyshows. For example, the research found those in thehigher-spending-over-time category spent 40 percent more onoutpatient spending than those with just one year of highspending.

The KFF study found that the average drug spend in 2017 for allemployees was $1,290. For those with high spending just in thatyear, the average drug spend was $5,110. For the enrollees withpersistently high spending, the 2017 drug spend averaged$34,120.

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