Should We Subsidize the Sick?

The projected savings from the are not solely from the health care exchanges: a large portion of savings stem from re-allocating medical resources towards the sickest patient populations. By improving the health of the sickest patients with high levels of health care utilization, the ACA directs savings toward other provisions such as insurance subsidies.

A new study in Medical Care Research and Review collected information on patients with to study utilization over a 6-year period. By dividing patients into 5 different utilization groups over time, the researchers were able to identify patterns in medical resource usage as they relate to patient demographics and disease states. This information, which creates a better picture of how patients obtaining coverage under the exchanges will access care, could and should drive adjustments to our health care system.

The results show that patients in high-utilization groups were likely to remain as high utilizers at both 1 year (43.4%) and 5 years (34.4%). Certain diagnoses, such as HIV/AIDS, renal disease, and certain geographic distributions, such as southern states, were associated with stable rates of high-utilization over the 6-year study period.

Classifying patients by health care utilization, and thus costs, has multiple uses. In (CDHP), the ability to anticipate medical spending can allow patients to make financially prudent decisions regarding health saving and health reimbursement accounts. However, insurers can use utilization data to cherry-pick healthy patients with negligible medical needs.

To prevent adverse selection and incentivize insurers to cover all patient populations, government agencies can use this information to subsidize care for high-utilization groups. These regulatory elements are important to ensure that all individuals can receive access to affordable health care, and can further guide resources to intensive disease management.

Though the future of health care will include novel medications, instruments and diagnostic modalities, major improvements will come in the form of improved resource allocation. Understanding the utilization patterns of patient communities is imperative to drive continued improvements.

commentary by Orlando Sola, MPH

Abstract

OBJECTIVE: Surprisingly little is known about long-term spending patterns in the under-65 population. Such information could inform efforts to improve coverage and control costs. Using the MarketScan claims database, we characterize the persistence of health care spending in the privately insured, under-65 population. Over a 6-year period, 69.8% of enrollees never had annual spending in the top 10% of the distribution and the bottom 50% of spenders accounted for less than 10% of spending. Those in the top 10% in 2003 were almost as likely (34.4%) to be in the top 10% five years later as one year later (43.4%). Many comorbid conditions retained much of their predictive power even 5 years later. The persistence at both ends of the spending distribution indicates the potential for adverse selection and cream skimming and supports the use of disease management, particularly for those with the conditions that remained strong predictors of high spending throughout the follow-up period. PMID: 25701579.

Hirth, RA et al. Med Care Res Rev. 2015; 72(3): 277-97.