The cost of healthcare remains a major issue for the average American. Yet just 5 percent of people known as “superusers” account for over half of all healthcare spending during a given year. To understand these disparities, the Peterson-Kaiser Health System Tracker (HST) analyzed spending among people continuously covered by employer-based insurance over a three-year period.
Here’s a look at the key takeaways from HST’s report, along with tips from HealthCare.com on how to manage your healthcare spending.
Superusers Aren’t a Homogeneous Group
Superusers fall into two categories: people who have high spending in just one year, and those who have persistently high spending. Note that health plans will still cover most of their bills.
When people have high spending in just one year, this is typically due to a short-term illness. This group makes up 3.7 percent of all studied enrollees, and most of their expenses can be attributed to hospital care. Those with high spending on inpatient services just in 2016 used an average of $24,270 in services (44 percent of their total costs incurred).
By comparison, people with chronic illnesses used an average of $15,970 in medical services, while average inpatient spending for the larger population was just $1,220. Accordingly, short-term health plans and Affordable Care Act plans both offer some level of financial protection here.
People with persistently high spending over multiple years typically have one or more chronic illnesses. These top healthcare spenders make up just 1.3 percent of all enrollees, but accounted for 19.5 percent of all spending in 2017. They spent an average of $87,870 in 2017, almost 60 percent more than people with a short term health condition ($55,670). For comparison, average spending for all enrollees was just $5,870.
Prescription drugs make up a much larger portion of healthcare costs among people with persistently high spending. They spent an average of $34,000 (not reflecting rebates manufacturers may have paid), making prescription costs about 39 percent of their total spending.
Persistently high spenders also tend to be older. Just 7 percent were under the age of 19, compared to 25 percent of total studied enrollees.
Certain Conditions Have High Odds for Healthcare Spending
People with the following chronic illnesses had the highest odds of becoming superusers:
- HIV (258.7 odds ratio)
- Cystic fibrosis (243 odds ratio)
- Multiple sclerosis (205.8 odds ratio)
- Regional enteritis and ulcerative colitis (32.2 odds ratio)
- Rheumatoid arthritis (21.3 odds ratio)
In 2015, 69 percent of people diagnosed with one or more of just 20 illnesses were most likely to become superusers. These include people who are diagnosed with certain cancers, immune disorders, and diabetes with complications.
What if You Become a Healthcare Superuser?
As the HST report shows, serious health conditions—be they short-term or chronic—can cost serious money. Fortunately, all comprehensive health insurance plans have an out-of-pocket maximum, or limit on how much you have to pay for care in a given year.
Once you spend this amount on deductibles, copayments and coinsurance, your insurance will cover 100 percent of your healthcare costs. (Monthly premiums don’t count toward your out-of-pocket maximum, nor does any spending on care that’s not covered by your plan.)
As of 2019, the highest possible out-of-pocket maximum is $7,900 for an ACA individual plan and $15,800 for a family plan. Keep in mind that these amounts are typically found on the lowest tier metal level plan, which also has the lowest monthly premiums. Higher metal plans have higher premiums, and lower out-of-pocket maximums.
If you’re worried about healthcare expenses, you may want to switch to a plan with higher monthly premiums, but lower out-of-pocket costs. Or you could pair a high deductible health plan with a health savings account to set aside pre-tax money on qualified expenses.
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What if You’ve Got High Healthcare Spending at 65 or Older?
There are several ways you can lower your healthcare costs. The one that’s right for you will depend on your needs and budget.
If you’re enrolled in Original Medicare and spend more on prescription drugs, you could buy a Medicare Part D plan to help cover the costs. Or you could switch to a Medicare Advantage plan that includes prescription drug coverage.
If you’re enrolled in Original Medicare and spend more on health services, you’ll definitely want to consider Medicare Advantage or a Medicare Supplement (Medigap) plan. Since you can’t pair Medigap with Medicare Advantage, you may want to evaluate the pros and cons before you choose Original Medicare or Medicare Advantage.
Finding Health Plans for High Medical Costs
While you may not be a maximum spender, you should still choose your health plan carefully. Monthly premiums and out-of-pocket costs can have a big impact on your budget, so you’ll need to decide how to balance costs and coverage.
If you’re 65 or older, you aren’t off the hook, either. Original Medicare won’t cover all of your expenses, so it’s worth your time to look into additional options.
No matter your age, health status, or budget, a little research goes a long way when it comes to finding the right health coverage!