By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    UV damage to eyes
    Warning Signs of Long-Term UV Damage to Your Eyes
    December 9, 2021
    degree for healthcare job
    The Ultimate Healthcare Recruiting and Staffing Guidebook
    March 21, 2022
    medicare part d benefits
    Everything that You Need to Know About Medicare Part D
    August 15, 2022
    Latest News
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
    The Wide-Ranging Benefits of Magnesium Supplements
    June 11, 2025
    The Best Home Remedies for Migraines
    June 5, 2025
    The Hidden Impact Of Stress On Your Body’s Alignment And Balance
    May 22, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    health navigators
    What Is a “Navigator”?
    July 17, 2013
    “Stunning Progress” but OOPs! in Afghanistan
    December 23, 2011
    physicians and medicare payments
    Physician Payments: The Not-So-Secret Secret
    August 9, 2013
    Latest News
    When Healthcare Ends, the Legal Process Begins: What Families Should Know About Probate and Medical Estates
    June 20, 2025
    Preventing Contamination In Healthcare Facilities Starts With Hygiene
    June 15, 2025
    Strengthening Healthcare Systems Through Clinical and Administrative Career Development
    June 13, 2025
    Building Smarter Care Teams: Aligning Roles, Structure, and Clinical Expertise
    May 18, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Persistence and the Market for Health Insurance
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Persistence and the Market for Health Insurance
BusinessPolicy & Law

Persistence and the Market for Health Insurance

JohnCGoodman
Last updated: February 1, 2012 2:22 pm
JohnCGoodman
Share
6 Min Read
SHARE

Have you ever read an article in which the writer compares the incomes of the top 1% to the bottom 99% over the last decade, say? Or the comparison might contrast the top 10% to the bottom 90%?

The problem: the author is encouraging you to think that the people in the top 1% at the beginning of the decade are the same people who are in the top 1% at the end of the decade. But they aren’t. People move in and out of this category with surprising frequency. Yet if they aren’t the same people, what’s the point of the comparison?

Have you ever read an article in which the writer compares the incomes of the top 1% to the bottom 99% over the last decade, say? Or the comparison might contrast the top 10% to the bottom 90%?

The problem: the author is encouraging you to think that the people in the top 1% at the beginning of the decade are the same people who are in the top 1% at the end of the decade. But they aren’t. People move in and out of this category with surprising frequency. Yet if they aren’t the same people, what’s the point of the comparison?

More Read

Social Security Expands Online Services
BREAKING: New Rules on HSAs
Patient-Centric Care Models: Aligning Staffing with Patient Needs
Making Connections: 7 Benefits Of Texting In Healthcare
What If You Need Emergency Care and Don’t Have Insurance?

A similar thing happens in health care. I frequently see writers say that a small number of people spend most of the health care dollars. True. But the small number this year are not the same people as the small number last year, or the year before.

As in the case of the income comparisons, readers can be misled into thinking that our health care problems boil down to how to take care of a small number of people. Not so.

“My momma always said life is like a box of chocolates…
You never know what you’re gonna get.”

– Forrest Gump

 A new study by the Agency for Healthcare Research and Quality shows how much fluidity there is among the categories of patients that spend the most health care dollars:

  • In 2008, 1% of the population accounted for about one-fifth of all health care spending. Yet the following year, 80% of these patients dropped out of the top 1% category.
  • The top 5% of the population accounted for nearly half of all health care spending. Yet 62% of these patients dropped out of this category the following year.
  • Although the top 10% spent 64% of all health care dollars, the following year fewer than half of these patients were still in this category.
  • At the other end of the spectrum, the bottom half of the population spent only 3% of health care dollars. Yet one of every four of these patients moved to the top half the following year.

Here is something else that’s interesting:

  • The top 10% are spending almost two-thirds of all health care dollars in any one year.
  • Of those who remained in this category for both years, 43% were elderly.
  • Another 40% were under 18 years of age.

In other words, the persistently sick tend to be young or old. Among the adult, nonelderly population who were in the top 10% the first year, almost three of every four were in the bottom 75% of spenders the second year.

Why is this important? If a small number of people spent most of the health care money and they were the same people year after year, there would not be much point in having a real market for health insurance.

Consider fire insurance. This makes sense only if fires are largely unpredictable and could happen to any homeowner. But suppose that the small percent of home owners who experience a fire in any one year are the very same people who experience a fire every year. In such a world, fire insurance would not be very practical.

The same thing is true in health care.

Most people in health policy view health insurance as just a way to pay medical bills. In fact, I am probably one of the very few people you interact with who believes in real health insurance and who believes there is a social need for it. I am also one of the very few people you interact with who believes we need a real market for health risks in order to determine what is the best way to insure against them and to determine what is the best way to partition insurance products between self-insurance and third-party insurance.

It’s always nice to have one’s view of the world confirmed by the evidence.

   

TAGGED:health insurance
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

recovering from injury
Rebuilding After Injury: Path to Physical and Emotional Recovery
News
June 22, 2025
scientist using microscope
When Healthcare Ends, the Legal Process Begins: What Families Should Know About Probate and Medical Estates
Global Healthcare
June 18, 2025
How Therapy Can Improve Your Mental Health and Daily Life
How Therapy Can Improve Your Mental Health and Daily Life
Mental Health
June 18, 2025
healthcare facilities
Preventing Contamination In Healthcare Facilities Starts With Hygiene
Global Healthcare Infographics
June 15, 2025

You Might also Like

In Medicare Advantage, providers are becoming payers

February 5, 2016
Policy & LawPublic Health

Here’s The Value Of Using A Medical Expert Witness

February 5, 2019
BI graphics HealthCare Jobs
BusinessMedical Education

10 Best Jobs in Healthcare

December 19, 2014
health navigators
Policy & Law

What Is a “Navigator”?

July 17, 2013
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?