INSIGHTS

What Employers Miss About High-Dollar Claimants and Why It Costs Them at Renewal

Discover why 0.5% of members drive 40% of costs, and how Virtue Health helps employers stop million-dollar claims from wrecking renewals.

May 5, 2025

This isn’t breaking news. But it’s reshaping the benefits playbook.

Employers are facing more $1M+ healthcare claims than ever, and the trend shows no signs of slowing down.

Sun Life’s 2024 report shows a 50% increase in million-dollar claims since 2020, with $2M–$3M claims nearly doubling.

Behind the headlines, there’s a deeper shift underway: It’s not just inflation, it’s concentration. The few are driving the many.

Just 7–10% of plan members drive 80% of total healthcare costs.

And only 0.5–1% account for up to 40% of total spend.

So, what does that mean for your clients? For your renewals? And for your benefits strategy?

The answer isn’t what you’ve been told, and it might change how you approach your entire book of business. Let’s take a closer look.

What Employers Miss About High-Dollar Claimants and Why It Costs Them at Renewal

Why the 80/20 Rule in Healthcare Is Dead

How Walmart Saved Billions on Claims

The 1% Claimants That Wreck Renewals

6 Steps to Manage High-Dollar Claimants

Why VH Delivers Single-Digit Renewals

Why the 80/20 Rule in Healthcare Is Dead

For years, employers have been looking at healthcare costs through the wrong end of the telescope.

Largely because we’ve all been taught the 80/20 rule: manage 20% of the members, and you’ll control 80% of the costs.

But the data tells a different story in 2025:

Deloitte reports that 0.5–1% of claimants make up 33–40% of all spending.
According to Tom Emerick, author of Cracking Health Costs, 7–10% of members drive 80% of total healthcare costs.
And Sun Life’s “High-Cost Claims and Injectable Drug Trends Analysis” shows that the top 10 high-cost conditions account for 72% of all stop-loss reimbursements.

This isn’t a broad problem, it’s highly concentrated.

A few members. A few conditions. That’s what’s driving the spend.

And your current plan likely isn’t equipped to manage them.

That’s why the 80/20 rule in healthcare is dead. And it’s not coming back.

How Walmart Saved Billions by Targeting High-Cost Claimants

If anyone saw this coming, it was Tom Emerick, former VP of Global Benefit Design at Walmart for 15 years.

He oversaw benefits for 1.6 million employees, mentored Virtue Health’s founder, and developed strategies for British Petroleum, Burger King, and other global giants, ultimately impacting over 30 million life years.

He rejected broad-based wellness programs, step challenges, and yoga apps, in favor of a precision strategy targeting high-dollar claimants with high-cost cases—late-stage cancer, dialysis, and rare chronic conditions.

So he built a model around that, a proactive, precision approach aimed squarely at managing the most expensive, complex cases.

Instead of casting a wide net, Tom honed in on early detection, top-tier care navigation, and waste avoidance.

That model didn’t just reduce spend, it saved Walmart from going out of business. Because he knew how to control high-dollar claimants.

Now fast forward to today: most mid-size employers are still operating like it’s 2005, spreading their resources across the entire employee population when just 1% is blowing up the budget.

Financial and employee health isn’t about controlling the middle, but building a system to identify, navigate, and contain the few patients who drive most of the healthcare costs.

Doing the opposite isn’t a poor strategy, but like playing chess while the house burns down.

The 1% Claimants That Wreck Renewals And How to See Them Coming

Even when everything looks good on paper, strong engagement, smart plan design, and cost containment strategies in place.

You still get hit with a large increase.

Why? Because just one or two high-dollar claims blow up the numbers.

These aren’t outliers. They’re concentrated, predictable risks that show up year after year, and most employers have no real plan to manage them.

Sun Life’s latest data confirms it: the top 10 high-cost conditions—cancer, organ transplants, leukemia, congenital disorders—aren’t rare. They make up 72% of all stop-loss reimbursements.

Cancer has been the top cost driver for 4 straight years.

Average cost? $213,000 per claim.

But these claims often don’t trigger alarms until it’s too late, until stop-loss gets hit and everyone in the pool pays the price.

And if anyone understands how this system works, it’s hospitals. Just like casinos focus on high-rollers, hospitals build their entire revenue model around high-cost claimants.

According to Dr. Eric Bricker on Relentless Health Value, hospitals only need 2–3 high-cost patients per month to hit their revenue goals.

And if employers don’t focus their benefit strategy on these whales, the plan gets eaten alive, often without warning.

The subsequent result is a double-digit renewal increase. Employer frustration. And CFOs facing a self-funding re-evaluation.

The math breaks down because the plan wasn’t designed to manage the 0.5–1% of members responsible for 40% of total spend.

Yet the group still tries to solve this with a wellness app or a broader engagement campaign.

Yes, you need to support the whole population, but real strategic impact starts by addressing the high-cost cases first.

To do that, you need to see the 1% coming before they wreck your renewal. But how?

6 Proven Steps to Manage High-Dollar Healthcare Claimants

Virtue Health founder John W. Sbrocco took a proven strategy, originally designed for Fortune 500s to manage high-dollar claimants, and made it work for the mid-size market.

He was mentored by Tom Emerick, Walmart’s former VP of Global Benefit Design, who didn’t just theorize this approach; he executed it at scale and uncovered a key insight:

“You don’t manage healthcare costs by managing the masses. You manage the outliers that break the budget.”

So, Virtue Health built a 6-step system to manage these claimants before they hit stop-loss. Here’s how it works:

1. Aligned Partners: We start by choosing independent TPAs and pharmacy benefit managers that aren’t tied to the big carriers. These partners prioritize transparency, accountability, and protecting the employer, not profiting off claims.

2. Weekly Trigger Reports: Each week, we receive diagnosis reports that flag early indicators of potentially costly conditions, medications, procedures, or diagnoses that often lead to major claims. These signals help us act before costs explode.

3. Identify Claimants: Once a trigger is flagged, our team identifies the member and the condition. Speed here is critical.

4. Partner Engagement: We loop in the TPA and the adviser to get the full picture. Has HR been notified? Is the employer aware? Can someone reach out to guide the member through their care options?

5. Intelligence Gathering: Now it’s about clarity. Is the current treatment path the best? Are there more effective options at a lower cost? We get involved by asking the right questions and consulting the right experts.

6. Member Engagement: Once we have the facts, we reach out to the member, not to pressure, but to provide better paths. Whether that’s switching providers, enrolling in a covered program, or accessing higher-quality care, we help members make informed choices that improve outcomes and reduce costs.

This isn’t theory. It’s a system that works.

In 2024, 67% of Virtue Health employers experienced a 6% premium increase, without compromising care.

Why Virtue Health’s Private Stop-Loss Consortium Delivers Single-Digit Renewals

The pressure of unmanaged high-dollar claims compounds over time, making renewals unsustainable.

The programs that fail are the ones that let every group in without aligned partners, functioning like a fully insured health plan, blind until it’s too late.

That’s why Virtue Health built a Private Stop-Loss Consortium focused entirely on identifying and managing high-dollar claimants before they hit stop-loss.

Unlike Public Captives and Consortiums, we require cost containment to participate in our Private program. Here’s how it looks in action:

We prioritize control over high-dollar claims: By maintaining the integrity of our Private Stop-Loss Pool with cost containment requirements.
We eliminate plan abuse: No Carrier Administrators, no Big 3 PBMs, no buying business.
We provide flexibility: Employers can enter or renew at any time of the year and choose the TPA and PBM.

By navigating smartly rather than denying care, we avoid the million-dollar landmines that wreck stop-loss pools and jack up rates for everyone.

As a result, Virtue Health has consistently hit targets like 5–6% average premium increases, even while the rest of the market faces 20%+ average premium renewal increases.

Are you ready to stop losing renewals over million-dollar claims, or are you willing to watch your book walk away?

If you’re tired of seeing high-dollar claimants wreck your renewals while your current partner shrugs, it’s time to move differently.

Our Private Model isn’t for everyone, only for advisers who refuse to lose.