A study entitled, “Trends in the Concentration and Distribution of Health Care Expenditures in the US, 2001-2018” published in the JAMA Network Open[1] examined healthcare spending by between 30,461 and 39,165 individuals over that period. The authors[2] “sought to answer the following questions: How is the concentration of health care spending changing in the US over time? What are the differences in concentration curves between population groups (e.g., income and insurance type)? What are the differences in concentration curves between expenditure categories (e.g., outpatient vs inpatient)? How do these concentration curves change over time?”
Tellingly, the adage that 5% of the population accounts for 50% of the expenditures remains true. “[I]n 2018, the top 4.6% (95% CI, 4.3%-4.9%) of the US population by spending accounted for 50% of health care expenditures.[3] Although this fraction varied across population groups or expenditure categories, it remained remarkably stable over time with one exception: the concentration of spending on prescription drugs. In 2001, one-half of all expenditures on prescription drugs were concentrated in 6.0% (95% CI, 5.6%-6.4%) of the US population, but by 2018, this proportion had decreased to 2.3% (95% CI, 2.1%-2.5%). This change does not appear to be associated with a change in the overall share of prescription drug expenses, which increased by only a small amount, from 20.4% in 2001 to 24.8% in 2018.”
“The concentration of health care expenditures across various expenditure brackets has been strikingly stable. For example, between 2001 and 2018, the top 50% bracket varied between 4.2% and 4.8% of the population, with small fluctuations consistent with statistical noise. This is a surprise given that, during this period, there have been substantial changes in US demographic characteristics (eg, an aging population and increasing diversity) and in health care coverage models (eg, the Patient Protection and Affordable Care Act). The proportion in the nonspender bracket is also consistent at approximately 20%, with a recent decrease in 2017 and 2018, which may or may not be confirmed in 2019. …
“There are 3 exceptions to the stability of concentration. First, cost has become more concentrated among the uninsured. The Patient Protection and Affordable Care Act has been associated with more individuals with health issues getting insured, and the uninsured have become younger and healthier, which, in turn, leads to more concentrated costs. Second, the distribution of costs for home health and equipment has become less concentrated as the push to keep individuals out of the hospital with interventions at home has become stronger. …
“As shown in this cross-sectional study, in any given year, slightly less than 5% of the US population accounts for 50% of health care expenditures. International comparisons with England or Germany suggest that this is a feature of health systems in high-income countries and that the US is not an outlier in this regard despite spending more per person on health care. At the same time, approximately 20% of the US population are nonspenders. What is remarkable is that despite more than 2 decades of explicit policy aimed at increasing preventative care with a goal of decreasing the incidence of acute, expensive conditions, these percentiles have hardly changed. This finding is consistent with what Berk and Fang have previously noted and, furthermore, carries over in nearly all population subgroup and expenditure category analyses.”
This study was published on September 14, 2021 as an open access article distributed under the terms of the CC-BY License. A Creative Commons license is a public copyright license that enables the free distribution of an otherwise copyrighted “work”. A CC license is used when an author desires to provide others the right to share, use, and build upon a work that the author has created. The tables included this study are available as Microsoft Excel files from a public repository (https://github.com/recon-strategy/concentration-parameters).
[1] https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2784058.
[2] Maximilian Holle, BA; Tory Wolff, MBA; Marc Herant, PhD, MD.
[3] Vision and dental expenditures were not included.