Measuring financial protection in health in the United States

One rationale for health insurance coverage is to provide financial protection against catastrophic health expenditures. This article defines a lack of financial protection as household spending on health care when: (1) out-of-pocket (OOP) health expenditures exceed 10% of family income; (2) out-of-pocket expenditures exceed an absolute level of 2000 US dollars per family member on an annual basis; and (3) combined out-of-pocket and prepaid health expenditures exceed 40% of family income. The article explores how the likelihood of households in the United States surpassing these thresholds varies by income level, extent of insurance coverage, and the number of chronic conditions. The results show clearly that there is a lack of financial protection for health services for a wide segment of the US population-particularly so for poor families and those with multiple chronic conditions. The results are placed in an international context. Similar studies in other countries would allow for more in-depth comparisons of financial protection than are currently possible.     

Financial Burden and Out-of-Pocket Expenditures for Mental Health Across Different Socioeconomic Groups: Results from HealthCare for Communities

BACKGROUND: Mental health benefits have traditionally been much less generous than benefits for physical health care, with separate deductibles, higher copayments or coinsurance, and lower limits on covered services, a trend that continues despite a recent wave of 'parity' legislation. In spite of the current policy debates on mental health insurance reforms, little is known about the burden of mental health out-of-pocket expenditures. AIMS OF THE STUDY: This study examines differences in out-of-pocket expenditures and their burden across different populations, stratified by insurance status, age, ethnicity, and socioeconomic groups. METHODS: This study uses the 1998 HealthCare for Communities household survey, the latest national survey data that are currently available, to measure the burden of out-of-pocket mental health expenditures. We use several measures of burden such as total out-of-pocket expenditures, their share of total treatment costs, and their share of family income. To address the methodological issues that arise in the calculation of the relative measures of burden (e.g. outliers, measurement error, systematic underreporting) we consider three different approaches that have been suggested in the literature and discuss their relative advantages given the type of data typically available. RESULTS: Although there is a common perception that out-of-pocket expenditures for mental health services represent a significant burden for service users, the estimates suggest that this is not the case. In fact, across the three measures of out-of-pocket expenditures as a share of income the estimates are under 10 percent for most groups. However, there is some variation in burden across groups with people who are older, uninsured, or minority spending a larger share of their income out-of-pocket. Since many insurance plans have limits on the number of visits covered and on the total amount that the insurer will pay for mental health services, the share of total mental health expenditures that are paid by individuals is another important measure of the burden faced by people with mental health service needs. We estimate that the mean out-of-pocket share of total expenditures for the group as a whole is 25 percent. In addition, we find that the burden varies across groups with older, more educated, or privately insured individuals paying a larger share of expenditures out-of-pocket. DISCUSSION: Although the overall picture regarding the burden of out-of-pocket costs relative to income is encouraging, it is also important to keep in mind that individuals make treatment decisions based on their available income. The fact that the burden of actual out-of-pocket payments is relatively low may also reflect decisions to forego potentially valuable care. Nevertheless, the results for mental health do not suggest that out-of-pocket costs are currently a major burden for most users. This situation may reflect a major change from the past given the recent shifts towards managed care, however there are no comparable data available to test this hypothesis empirically. IMPLICATIONS FOR HEALTH POLICY FORMULATION AND FURTHER RESEARCH: It may be tempting to attribute the low estimates of out-of-pocket expenditures as a share of income in this paper to recent parity legislation. However, recent research shows that parity legislation has not led to significant changes in benefit design. In fact the high ratio of out-of-pocket payments relative to total mental health care expenditures presented in this paper are consistent with a limited role of parity legislation. Another possible explanation for the observed results is the growth of managed care and the shift in treatment style towards greater use of medications, which are comprehensively covered in most private insurance plans, has reduced total treatment costs and consequently the size of out-of-pocket payments.     

Individual insurance benefits to be available under health reform would have cut out-of-pocket spending in 2001-08

Under the Affordable Care Act, individual health insurance will probably become more generous and more like employment-related insurance. Currently, individual insurance typically has less generous benefits than employment-related insurance. This study compared out-of-pocket spending on health care between individual and employment-related insurance, controlling for numerous characteristics such as health status. Then it simulated the impact of full implementation of provisions of the Affordable Care Act on adults who currently have individual insurance, including important subgroups-adults with chronic conditions, the near-elderly (ages 55-64), and low-income populations. If adults who had individual insurance during 2001-08 had instead had benefits similar to those under the Affordable Care Act, their average annual out-of-pocket spending on medical care and drugs might have been $280 less. The near-elderly and people with low incomes might have saved $589 and $535, respectively. An important improvement would have been the reduced probability of incurring very high out-of-pocket spending. The likelihood of having out-of-pocket expenditures on care exceeding $6,000 would have been reduced for all adults with individual insurance, and the likelihood of having expenditures exceeding $4,000 would have been reduced for many.     

An equitable way to pay for universal coverage.

This article describes a way to finance universal health care coverage that preserves much of the current financing system and replaces funds obtained from regressive sources with revenue from more progressive ones. New funding would be needed for 24 percent of health expenditures and would be raised through an increase in the federal personal income tax. Premiums are eliminated since their cost is the same to everyone regardless of income. Cost sharing and out-of-pocket spending for medically necessary services are also abolished. In a more equitably financed system, employers would pay a new payroll tax that raised the same amount of money they currently spend for employee health insurance premiums; this would require a payroll tax of about 7 percent. Revenue from an increase in federal personal income taxes would replace household out-of-pocket expenditures for medically necessary services and payments for insurance premiums. For the average, middle-income family, the tax increase would total $731 in 1998. In exchange for the tax increase, no American or American employer would need to buy health insurance or face out-of-pocket charges for any medically indicated health care.     

Health care expenditure patterns for adolescents

Health care expenditure patterns are described using a sample of 2,767 adolescents aged 10 to 18 years from the National Medical Care Utilization and Expenditure Survey. Average total per capita health care expenditures were $525. Average out-of-pocket expenses were $151 in 1988 dollars. The burden of out-of-pocket expenses was distributed unevenly among the families of adolescents. The 10% of adolescents with the highest expenses accounted for 65% of ail out-of-pocket expenses. The presence of health insurance coverage greatly reduced the risk of incurring burdensome out-of-pocket expenses. Health policy interventions to improve health insurance coverage of adolescents are discussed.     

A decade of health care cost growth has wiped out real income gains for an average US family

Although a median-income US family of four with employer-based health insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009 (in current dollars), this gain was largely offset by increased spending to pay for health care. Monthly spending increases occurred in the family's health insurance premiums (from $490 to $1,115), out-of-pocket health spending (from $135 to $235), and taxes devoted to health care (from $345 to $440). After accounting for price increases in other goods and services, the family had $95 more in monthly income to devote to nonhealth spending in 2009 than in 1999. By contrast, had the rate of health care cost growth not exceeded general inflation, the family would have had $545 more per month instead of $95-a difference of nearly $5,400 per year. Even the $95 gain was artificial, because tax collections in 2009 were insufficient to cover actual increases in federal health spending. As a result, we argue, the burdens imposed on all payers by steadily rising health care spending can no longer be ignored.     

National health expenditures, 1995

This article presents data on health care spending for the United States, covering expenditures for various types of medical services and products and their sources of funding from 1960 to 1995. In 1995, $988.5 billion was spent to purchase health care in the United States, up 5.5 percent from 1994. Growth in spending between 1993 and 1995 was the slowest in more than three decades, primarily because of slow growth in private health insurance and out-of-pocket spending. As a result, the share of health spending funded by private sources fell, reflecting the influence of increased enrollment in managed care plans.     

Health care expenditures among working-age adults with physical disabilities: Variations by disability spans

BackgroundData on health care costs for working-age adults with physical disabilities are sparse and the dynamic nature of disability is not captured.ObjectivesTo assess the effect of 3 types of disability status (persistent disability, temporary disability, and no disability) on health care expenditures, out-of-pocket (OOP) spending, and financial burden.MethodsData from Medical Expenditure Panel Survey panel 12 (2007–2008) were used. Respondents were classified into 3 groups. Medians of average annual expenditures, OOP expenditures, and financial ratios were weighted. The package R was used for quantile regression analyses.ResultsFifteen percent of the working-age population reported persistent disabilities and 7% had temporary disabilities. The persistent disability group had the greatest unadjusted annual medians for total expenditures ($4234), OOP expenses ($591), and financial burden ratios (1.59), followed by the temporary disability group ($1612, $388, 0.71 respectively). The persistent disability group paid approximately 15% of total health care expenditures out-of-pocket, while the temporary disability group and the no disability group each paid 22% out-of-pocket. After adjusting for other factors, quantile regression shows that the persistent disability group had significantly higher total expenditures, OOP expenses, and financial burden ratios (coefficients 1664, 156, 0.58 respectively) relative to the no disability group at the 50th percentile. Results for the temporary disability group show a similar trend except for OOP expenses.ConclusionsPeople who have disabling conditions for a longer period have better financial protection against OOP health care expenses but face greater financial burdens because of their higher out-of-pocket expenditures and their socioeconomic disadvantages.     

National spending on mental health and substance abuse treatment by age of clients, 1997

This article examines 1997 national expenditures on mental health and substance abuse (MH/SA) treatment by 3 major age groups: 0–17, 18–64, and 65 and older. Of the total $82.4 billion in MH/SA expenditures, 13% went to children, 72% to adults, and 15% to older adults. MH/SA treatment expenditures made up 9% of total health care expenditures on children, 11% of total health care expenditures on adults, and 3% of total health care expenditures on older adults. Across the 3 age groups, distinct differences emerged in the distribution of MH/SA expenditures by provider-type. For example, about 85% of spending for youth was for specialty MH/SA providers, compared to 76% for adults and 51% for older adults. In addition, 33% of MH/SA spending for older adults went to nursing home care, while other age groups had almost no expenditures in nursing homes. Age-specific estimates enable policymakers, providers, and researchers to design programs and studies more appropriately tailored to specific age groups.     

Recession contributes to slowest annual rate of increase in health spending in five decades

In 2009, US health care spending grew 4.0 percent--a historically low rate of annual increase--to $2.5 trillion, or $8,086 per person. Despite the slower growth, the share of the gross domestic product devoted to health spending increased to 17.6 percent in 2009 from 16.6 percent in 2008. The growth rate of health spending continued to outpace the growth of the overall economy, which experienced its largest drop since 1938. The recession contributed to slower growth in private health insurance spending and out-of-pocket spending by consumers, as well as a reduction in capital investments by health care providers. The recession also placed increased burdens on households, businesses, and governments, which meant that fewer financial resources were available to pay for health care. Declining federal revenues and strong growth in federal health spending increased the health spending share of total federal revenue from 37.6 percent in 2008 to 54.2 percent in 2009.     

The Burden of Maternal Health Care Expenditure in India: Multilevel Analysis of National Data

To quantify the economic burden of maternal health care services on Indian households and examine the levels of expenditure incurred in public and private health care institutions at the national, state and community levels. Cross-sectional population data from the 2004 National Sample Survey Organisation were used, which considered 9,643 households for the analysis where at least one woman received maternal health care services during the year preceding the survey. Multilevel linear regression techniques were used to estimate the effect of household, cluster and state characteristics on the proportion of maternal health care expenditures over total household expenditures. Over 80 % of households reported paying for maternal health care services, with those using private care facilities paying almost 4 times more than those using public facilities. Multilevel analyses show evidence of high burden of maternal health care expenditures, which varied significantly across states according to the level of health care utilisation, and with considerable heterogeneity at the household and community levels. Maternal health care services in India are offered free at the point of delivery, yet many families face significant out-of-pocket expenditures. The recent governmental policy interventions to encourage institutional births by providing nominal financial assistance is a welcome step but this might not help to compensate mothers for other indirect expenditures, especially those living in rural areas and poorer communities who are increasingly seeking care in private facilities.     

Mental Health Services for Children in Large, Employer-Based Health Plans, 1999

This study examines 1999 data from Medstat's MarketScan database of privately insured employees of US firms and their dependents. Of enrolled children and adolescents ages 2-18, 6.6% had claims for mental health services. Average outpatient expenditures per user were $651. Of children/adolescents with claims for mental health services (MH claimants), 3.4% had inpatient MH services, with an average length of stay of 8.9 days and average MH-related inpatient expenditure per user of $7,048. One half of MH claimants who had pharmacy benefit data had claims for psychotropic medications, with average expenditures per user of $328. Whereas children/adolescent mental health users comprised 8.3% of all service users, expenditures for their care were 20.5% of all service expenditures for children/adolescents in private health plans. Results also highlight the importance of including data on psychotropic medication in analysis of children's MH services utilization, as well as the need to consider the use of psychotropic medications among children/adolescents who do not utilize other MH services.     

Do State Parity Laws Reduce the Financial Burden on Families of Children with Mental Health Care Needs?

Objective. To study the financial impact of state parity laws on families of children in need of mental health services.
Data Source. Privately insured families in the 2000 State and Local Area Integrated Telephone Survey National Survey of Children with Special Health Care Needs (CSHCN) ( N =38,856).
Study Design. We examine whether state parity laws reduce the financial burden on families of children with mental health conditions. We use instrumental variable estimation controlling for detailed information on a child's health and functional impairment. We compare those in parity and nonparity states and those needing mental health care with other CSHCN.
Principle Findings. Multivariate regression results indicate that living in a parity state significantly reduced the financial burden on families of children with mental health care needs. Specifically, the likelihood of a child's annual out-of-pocket (OOP) health care spending exceeding $1,000 was significantly lower among families of children needing mental health care living in parity states compared with those in nonparity states. Families with children needing mental health care in parity states were also more likely to view OOP spending as reasonable compared with those in nonparity states. Likewise, living in a parity state significantly lowered the likelihood of a family reporting that a child's health needs caused financial problems. The likelihood of reports that additional income was needed to finance a child's care was also lower among families with mentally ill children living in parity states. However, we detect no significant difference among residents of parity and nonparity states in receipt of needed mental health care.
Conclusion. These results indicate that state parity laws are providing important economic benefits to families of mentally ill children undetected in prior research.     

The Effect of Parity on Expenditures for Individuals with Severe Mental Illness

Objective

To determine whether comprehensive behavioral health parity leads to changes in expenditures for individuals with severe mental illness (SMI), who are likely to be in greatest need for services that could be outside of health plans'' traditional limitations on behavioral health care.

Data Sources/Study Setting

We studied the effects of a comprehensive parity law enacted by Oregon in 2007. Using claims data, we compared expenditures for individuals in four Oregon commercial plans from 2005 through 2008 to a group of commercially insured individuals in Oregon who were exempt from parity.

Study Design

We used difference-in-differences and difference-in-difference-in-differences analyses to estimate changes in spending, and quantile regression methods to assess changes in the distribution of expenditures associated with parity.

Principal Findings

Among 2,195 individuals with SMI, parity was associated with increased expenditures for behavioral health services of $333 (95 percent CI $67, $615), without corresponding increases in out-of-pocket spending. The increase in expenditures was primarily attributable to shifts in the right tail of the distribution.

Conclusions

Oregon''s parity law led to higher average expenditures for individuals with SMI. Parity may allow individuals with high mental health needs to receive services that may have been limited without parity regulations.