Tuesday, April 16, 2013

Distribution of healthcare costs

One of the fascinating problems that goes unaddressed in the healthcare debate is the distribution of healthcare costs.



As the chart above shows, roughly 50% of the total healthcare spending in the US comes from the top 5% of patients.

A separate study by the AHRQ also showed similar concentrations of spend.

They focus a lot on the conditions that cause this, for instance here's their analysis of the most costly diseases.

Bar graph shows five most costly conditions by percentage of total health expenditures: Heart conditions, 8.3%; Cancer, 6%; Trauma, 6.9%; Mental disorders, 5.9%, Pulmonary conditions, 5.6%.

However, they have to add up 15 rather broad categories of diseases to get to ~50% of the costs.  By contrast, if you add up the 5% who are getting end of life care you get roughly the same percentage of costs.

The fact is that with so much of the cost locked in end of life care, meaningful cost reductions in healthcare requires a discussion of death and when its OK to let someone die.  CNN Money had an interesting article on this subject.

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