Comparing medical costs by analyzing high-cost cases.

Area of Science:

• Health Economics
• Public Health
• Biostatistics

Background:

• A small percentage of employees incur a disproportionately large share of corporate healthcare expenses.
• Individual employee medical costs can range from 100 to 500 times the average.
• Identifying drivers of extreme healthcare costs is crucial for cost management.

Purpose of the Study:

• To introduce and illustrate a methodology for comparing healthcare costs across different health risk groups.
• To investigate the association between specific unhealthy behaviors and the likelihood of incurring extreme medical expenses.
• To analyze the proportion of high-cost employees within defined health risk categories.

Main Methods:

• Developing a framework to compare health risk groups based on the prevalence of high-cost individuals.
• Utilizing a health claims dataset for empirical analysis.
• Stratifying employees into groups based on smoking status (smokers, ex-smokers, non-smokers) for cost comparison.

Main Results:

• The study demonstrates a method to quantify and compare the proportion of high-cost employees across health risk categories.
• Analysis using a dataset of male employees indicates differences in the proportion of high-cost individuals among smokers, ex-smokers, and non-smokers.
• The findings suggest that health behaviors are linked to extreme healthcare expenditure.

Conclusions:

• Comparing the proportion of high-cost employees across health risk groups is a viable alternative to analyzing average costs.
• This approach can help identify employee populations with a higher propensity for extreme healthcare utilization.
• Understanding the link between behaviors and high costs can inform targeted health and wellness interventions.