Two new studies just out highlight the extraordinary problems now facing the United States health system, and some of the consequences that could befall the country if critical parts of health reform are stripped away.

Who Spends The Most On Healthcare?

The first study, issued by the federal government's Agency for Healthcare Research and Quality on January 11, identified who in America is spending money on healthcare, and found that in 2008 and 2009, only 5% of the civilian population accounted for almost 50% of healthcare expenditures.

More significantly, 1% of the population accounted for approximately 21% of total healthcare expenses. According to the report, these expenses totaled approximately $1.26 trillion in 2009, meaning that the top 5% spent around $630 billion on healthcare, while the top 1% spent $265 billion. Of equal significance, 50% of the civilian population accounted for only 3% of overall healthcare expenditures.

Who were the top spenders? Not surprisingly, those over the age of 45 were disproportionately represented. Moreover, although persons over 65 accounted for only 13.2% of the overall population, they accounted for 42.9 % of the individuals in the top 10% of spenders. Although women represented only 51% of the population, they were 59% of those who remained in the top 10% of spenders in both 2008 and 2009.

The lesson for employers is clear, and illustrates why the automobile industry with its legacy of high-coverage, premium-free retiree health plans suffered so badly over the past few years. Retiree health coverage is extremely costly, and should be avoided or limited whenever possible. Second, the numbers illustrate how just a few sick individuals can account for much of an employer's healthcare expenditure in a single year. Health screening and a full range of wellness programs are a must for any employer that is seeking to control its healthcare costs. The results of the report also highlight why it is so important that health reform be done correctly.

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