According to an analysis by the IMS Institute for Healthcare Informatics, about 1% of the privately insured population drives about 25% of overall health costs. Their total medical bills average approximately $100,000 per year for hospital stays, prescriptions, doctor and ER visits, etc. As you might expect, many of these folks are in the final stages of life, but many of them simply have chronic health issues like high blood pressure or diabetes. People with chronic conditions filled 78% of all prescriptions, and costs incurred through outpatient care actually comprises the largest share of overall spending.
As an example, the annual cost of effectively managing diabetes typically averages about $12,000, but can quickly approach $102,000 if it rages out of control and the patient experiences complications such as heart attack, stroke, poor vision, or limb amputation.
Right now, many of these chronic issues are considered “pre-existing conditions”, and can serve as the basis for an insurer to deny coverage. But starting in 2014, when the new federal health care law is expected to go into effect, insurers will no longer be able to do this. Ideally, this ultimately gives insurers incentive to make sure their current customers do not reach that 1%, and they are starting to implement ways to do that, such as providing additional means to help manage chronic conditions and provide wellness incentives. But they are also evaluating different ways of compensating physicians, such as paying them more to coordinate care and developing ways for them to share in savings achieved when a patient avoids a hospital admission through better treatment.
Regardless of what may happen over the next few years, however, one thing is clear: the current model of health care insurance is changing.
Guest Editor: Dave Schlosser, Patien Navigator LLC