A look into health cost...

The Platinum Patients

Each year, 1 in every 20 Americans racks up just as much in medical bills as another 19 combined. This critical five percent of the U.S. population is key to solving the nation's health care spending crisis.

By Andrew McGill

If you’re like the average American, you spend around $1,000 per year on health expenses. You likely don’t often have to think about your deductibles and itemized health care costs.

But what if you get an appendicitis and need emergency surgery? Once the pain clears and you return home, the hospital bills begin to arrive—and they’re pricey. At the end of the year, your health care expenses end up totalling $20,000, including the amount your insurance company paid. This puts you far above the national average of $912 per year.

But where do you stack up compared to the rest of the U.S.? Let’s add a dot for every 2 million people in the country and creat a line of dots showing cost. Now plotting the cost per 2 million, we see most people on the lower cost left side. With that hefty bill, you’re near the upper end of the spectrum. Compare that to the big clump on the left, most Americans pay very little each year.

To get a better sense of the distribution of expenses, let’s sort the dots into 20 equal groups, ordered by total amount spent on health care, to represent every slice of the population. Each of the 20 bars represent about 16 million people.

You are now part of the top five percent of Americans who spent the most on the health care. When we add up the total expenditures for each group, we end up with a very lopsided chart—most of the nation’s medical bills come from your group of people on the right.

What’s most notable about this small slice of people is that they account for over 50 percent of all health care expenditures for all Americans. In other words, if the country’s population were 20 people, it would spend the same amount on its costliest patient as it would for the next 19 combined.

The Five Percent accounts for the same total expenditures as the rest of the population combined. So why not focus on the people who spend the most?

Despite that logic, legislators still prefer broad measures to lower health care spending, favoring higher deductibles and spending caps. That’s partially because it’s so hard to define the factors that push an otherwise healthy person into the costliest five percent of Americans. Besides their unenviable medical bills, they have very little in common with each other.

“When you're working on health care costs, it seems as though the big prize would be to do things to help this largest population,” said Paul Ginsburg, director of the Center for Health Policy at the Brookings Institution. “But the problems they have are very wide-ranging. It’s not like they're all suffering from the same thing.”

Truth is, there is no single group of sick people to blame for the United State’s high health care bills. Among the Five Percent, there is no “them.” Instead, the sickest five percent of Americans are drawn from all Americans — the young, the old, the chronically ill, and the temporarily injured alike.

There’s a great deal of turnover: On any given year, half of the Five Percenters will get better and drop out of the bracket. Fact is, the chronic conditions plaguing high-cost patients are quite common lower down on the cost scale, too. And no one has figured out how to tell when a stable, low-cost diabetic will jump into needing intense care.

If this spending disparity were a recent phenomenon, researchers might have an easier time picking out a cause. But studies show this distribution has persisted since the 1960s, and possibly even further — before the big entitlement programs of Medicare and Medicaid were founded.

The thing that has changed, of course, is the total amount Americans spend on health care—a figure that has ticked relentlessly upward. In 1960, medical spending accounted for 5 percent of the U.S. gross domestic product. By 2000, it had jumped to 13 percent. As of 2015, it stands at 18 percent.

The reasons behind that sharp rise are still not well understood. But in one light, America’s lopsided medical expenditures are an indication not of inefficiency, but of a willingness to spend. When a person’s health is on the line, the numbers suggest there’s almost nothing they wouldn’t pay.

Whatever the cause, this small percentage of the population holds many of the answers to reducing the enormous amount the U.S. spends on medical care. No solution adds up without addressing them first. In series of articles to be published over the next few weeks, we’ll explore some of the solutions that have been tried in different places—and in different ways—to serve the Platinum Patients.