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Uneven Distribution of National Health Care Spending and Its Implications on Health Insurance

February 7, 2012 at 4:44 pm
By Sameena Ahmed

In an article published in the journal Health Affairs in January, the US government reported that the growth in health spending in 2010 was the slowest it has been in the fifty-one years that data has been collected.  Due to losses of jobs, income, and health insurance, Americans have been delaying care and cutting back on health care spending.  (To read more about this in a New York Times article, click here.)

US health spending for 2010 was $2.6 trillion and has been reported as an average of $8,402 per person.  However, as Julie Rovner of NPR has pointed out, this average is not an accurate representation of the spending.  A study by the Agency for Healthcare Research and Quality shows that about five percent of the non-institutionalized population account for half of the nation's total health spending while half of the population account for less than three percent of the spending in 2009. 

The majority of the money spent on health care goes to treat a few very sick people, and people who remain in this top-spending category tend to be elderly, female, white, and covered by public health insurance.  People who spend minimal amounts on health care tend to be Hispanic or African-American, and report themselves as young and in good or excellent health.  

This report shows that many people do not use health care due to lack of insurance and that many others have health insurance but do not use it.  Rovner states that this explains why so many people have a hard time understanding the health care system, "They either don't have health insurance or don't use it if they do." (Click here for an NPR article about this study.)

Additionally, Rovner points out that these findings demonstrate the concept behind health insurance and explain why insurance companies are unwilling to cover people with preexisting health conditions unless everyone is required to have health insurance.  Health insurance companies function by using the premiums of a large number of low-cost clients to help pay for the health costs of a small number of high-cost clients.  However, if healthy people do not buy health insurance, then there are not enough low-cost clients to help pay for the health care of the high-cost clients. 

The current question is whether or not Congress can require people to have health insurance.  The United States Supreme Court will be hearing arguments in March about the individual mandate along with other components of the Patient Protection and Affordability Care Act.  There is expected to be a decision in June about policy taking effect in 2014.  (Here is a New York Times article about the Supreme Court's decision to hear this case.)

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