The Impact of Chronic Conditions on Spending Disparities

August 3, 2012

In a recent article from The Fiscal Times, Merrill Goozner reminded us again of the importance of wellness and prevention and the long-term impact a focus on these areas can have in cutting overall healthcare costs.  Citing a recent study on healthcare spending released by the National Institute of Health Care Management (NIHCM), Goozner outlined several key points about the disparities in healthcare spending throughout the country.  Most startling was the statistic that “just five percent of the population – about 15 million people – spent a whopping $623 billion or about half of all personal health care expenditures. That came to nearly $41,000 per patient.”  Further, if one narrows the window of scrutiny to the top one percent  of healthcare spenders only, you’ll find that – at an average of $90,000 spent per patient per year – this population of roughly three million Americans account for an astonishing twenty percent of all annual healthcare costs nationwide. 

When analyzing the data on a micro-level, the impact of chronic conditions emerged as primary driver of this spending.  And the impact of chronic conditions didn’t simply reside with the oldest spenders.  Big spenders still in the workforce with private insurance also shared an affliction of chronic conditions, and, overall a mere seven percent of all spenders in the highest spending category were classified as suffering from a non-chronic condition, such as an injury from a major car accident.

These results are sobering and underscore the Partnership to Fight Chronic Disease’s hard work to get chronic conditions recognized as a major cost driver and prevention accepted as an important, long-term cost cutter.  The spending disparities identified by the NIHCM mirror similar results found in a recent study released by PFCD on Medicaid Costs and the drivers behind them.  In the Medicaid population as well, a small portion accounted for massive annual expenditures; in this case ten percent of the Medicaid population accounted for a whopping 68 percent of total spending.  And the impact of chronic conditions with this group?  Significant.  In the top one percent of spenders alone, more than 80 percent of beneficiaries suffered from three or more chronic conditions.

As PFCD Chairman Ken Thorpe was quoted by The Fiscal Times, “If you look at what’s driving the growth in health care spending, half is due to the increase in chronic health conditions. Prevention is crucial to holding down costs long-term.”  These two studies certainly bear this out, as well as the critical and increasing need to continue the fight against chronic disease.