Health care spending in employee benefit plans is being massively skewed: just 1% of plan participants are responsible for nearly 30% of total health care spending. Here’s what that means—and what employers and workers need to be aware of.
Key Findings
- The top 1% of enrollees generate 29% of all health care costs. On average, each of these individuals costs over $200,000 per year.
- Over 60% of all enrollees in employer-sponsored plans have at least one chronic condition. Some have multiple, making them much more likely to end up among the highest spenders.
What’s Going On
- Chronic illness and comorbidity are major drivers. Conditions like heart disease, diabetes, obesity, and multiple overlapping health issues create high medical usage and costs.
- A small group of patients requires very expensive treatments—hospital stays, specialty drugs, surgeries—that push their costs way up.
- Preventive care and early intervention are underused, which means more people develop advanced-stage conditions that are costlier to treat.
Why It Matters for Employers
- Even if most employees are average or low-cost, the few high-cost individuals can put major pressure on a health plan’s budget.
- Costs from the top 1% affect premiums, plan design, risk pools, and contributions—even for employees who are healthy.
- Managing (or mitigating) those costs becomes essential for sustainability.
What Employers Can Do
- Predictive analytics to identify which employees may become high cost before they are—so intervention and case management can begin earlier.
- Disease management and wellness programs that help with chronic condition prevention and control.
- Specialized care coordination, ensuring high-cost patients receive the right care at the right time (and avoiding redundant or ineffective treatments).
- Value-based contracting with providers—paying for outcomes, rather than just volume of services.