NCPA - National Center for Policy Analysis

Health Care Spending Among Privately Insured

March 2, 2012

With the eventual full implementation of the Patient Protection and Affordable Care Act (PPACA), several million more Americans will be enrolled in health care insurance, many through state exchanges.  With the imminent drastic change, it is crucial that those defining the terms of qualifying plans understand trends in health care spending and differences between populations, says MarketWatch.

A new study by the IMS Institute has pointed out significant spending pattern differences between the two groups age 65 and over enrollees in Medicare and under-65 years old purchasers of private insurance.

  • For the privately insured under-65 years old segment, outpatient and inpatient services represent 59 percent and 20 percent of total spending, respectively.
  • This compares with Medical Expenditure Panel Survey (MEPS) findings of 39 percent and 43 percent, respectively, for outpatient and inpatient services spending within the Medicare age 65 and over population.

These differences will prove crucial as plan administrators seek to conform to the PPACA mandate that plans cover "essential benefits," as what constitutes "essential" clearly varies between the two groups.

A more drastic distinction is evident among members of each of these groups.

  • The top 1 percent of privately insured health care consumers constitutes 25 percent of health care spending.
  • The lowest 50 percent, meanwhile, are responsible for only 3 percent of the spending.
  • The top 1 percent of spenders spends nearly $100,000 annually per member on health services, in contrast to $3,837 per member for the overall plan population.
  • Among the top 1 percent, 77 percent have at least one chronic condition, 16 percent have at least one cancer and 13 percent suffer from auto-immune or other specialty conditions.

Source: "Success of U.S. Healthcare Reforms Linked to Sharper Focus on Spending Patterns of Privately Insured, IMS Health Says," MarketWatch, February 28, 2012.  "Healthcare Spending Among Privately Insured," IMS Institute, February 2012.

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