Lower health care costs are going to require a greater understanding of differences between the privately insured under-65 and Medicare age 65 and older populations, says a new report.

A report by the IMS Institute for Healthcare Informatics finds the privately-insured segment within the United States—particularly those health plan members under age 65—will remain the dominant part of the payment system even as the health care landscape transforms with the implementation of the Patient Protection and Affordable Care Act. Care setting and treatment use vary considerably between the two segments, resulting in a different distribution of costs across outpatient, inpatient and pharmacy services.

"As states look to define their essential health benefits packages, a deeper understanding of actual utilization patterns, especially for the small number of patients driving the lion's share of costs, is critical," says Murray Aitken, executive director, IMS Institute for Healthcare Informatics. "Further, effective benefits packages will need to fully consider services used by the three high-cost member segments—those with cancer, chronic conditions, and those with auto-immune or other specialty diseases."