Health Affairs, 25, no. 2 (2006): 567-568 doi: 10.1377/hlthaff.25.2.567-a © 2006 by Project HOPE	New Online   Obama's Success & Next Steps   3 Health Policy Options for President Obama   A Hybrid Proposal   Bipartisan Compromise

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Letters

Market Reforms, Continued

Marc Berk and Alan Monheit have examined what they’ve appropriately termed a "concentration of health care expenditures," most recently using 1996 data.¹ They found that the top 1 percent of the population—ranked by medical spending—accounted for 27 percent of annual 1996 expenditures ($56,459 per person); the top 10 percent of the population accounted for 69 percent; and the top 50 percent accounted for 97 percent. They also noted that the majority of people in the highest 1 percent are not elderly.

In a publication celebrating the thirty-fifth anniversary of Medicare, HCFA (now the Centers for Medicare and Medicaid Services) stated that more than 75 percent of Medicare spending is for the 15 percent of beneficiaries who incur costs of more than $10,000 and that 74 percent is for beneficiaries with incomes under $25,000.²

Taken together, this suggests that continuing to impose increasing reliance on market-based solutions (such as increased cost sharing) would fall to a great extent on those who generally need care the most. This is obviously costly and outside their ability to control—perhaps even unaffordable.

We need to acknowledge the findings about the effects of cost sharing on the demand for and use of services, as demonstrated by the RAND Health Insurance Experiment and other research. Before continuing to promote the use of market-based solutions to curb U.S. spending on medical care, however, our legislators and public and private purchasers that finance this care need to be more attentive to the root of the problem: the price (or cost) of the components of the medical care we receive and how our "health care system"—which for many of us is really not a system at all—contribute to making care so costly.

Franklin N. Laufer

NOTES

1. M.L. Berk and A.C. Monheit, "The Concentration of Health Care Expenditures, Revisited," Health Affairs 20, no. 2 (2001): 9–18.[Abstract/Free Full Text]
2. Centers for Medicare and Medicaid Services, Medicare 2000: Thirty-five Years of Improving Americans’ Health and Security (Baltimore: CMS, 2000).

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