The Growing Financial Burden Of Health Care: National And State Trends, 2001–2006

By Peter J. Cunningham
Health Affairs
March 25, 2010

The financial burden of health care — the ratio of total out-of-pocket spending for health care services and premiums to total family income — continues to increase nationally.

Although attention has been focused on rising health care costs, the fact that real median household income remained largely unchanged between 2000 and 2007 — hovering at about $50,000 — was an equally important contributor to increasing financial burden.

Among the total nonelderly U.S. population during 2004–6, 15.7 percent were insured people with high out-of-pocket expenses, and 14.2 percent were uninsured for the entire year. Thus, almost 30 percent of the U.S. population either had high financial burden or were uninsured.

Among those with employment-sponsored private insurance, the percentage with high financial burden increased from 15.1 percent in 2004 to 18.4 percent in 2006 — an increase that was very similar to that seen in the 2001–4 period.

Nationally, middle- and higher-income people with private insurance experienced the largest increases in financial burden.

Between 2001 and 2006, high burdens among the privately insured increased 17 percent for those below poverty, 56 percent among middle-income people, and 98 percent among higher-income people. An additional eleven million people with private insurance had high burdens in 2006 than in 2001; of these, 39 percent were high-income and 48 percent were middle-income.

(In the legislation just signed into law by President Obama) there are no subsidies for families with incomes greater than 400 percent of poverty, a group that has been experiencing the greatest percentage increase in high financial burden in recent years.

Thus, subsidizing private coverage and expanding public coverage for lower- and moderate-income families alone is not sufficient to stem the increase in high financial burden or to reduce the variation in financial burden across states. To stem the increase in financial burden among families at higher income levels — and to sustain proposed subsidies to lower-income people — it will be essential to combine cost containment efforts in health care along with achieving real gains in family income.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.0493v1

Those individuals with good incomes and who have employer-sponsored health plans should not be complacent, but should be very concerned for the following reasons:

* The largest increases in the financial burden of health care have been occurring amongst middle- and higher-income people

* Among those with employer-sponsored private insurance, 18.4 percent face a high financial burden (spending over 10 percent of income on health care)

* In the reform legislation just passed, there are no subsidies for families with incomes greater than 400 percent of poverty ($88,000 for a family of four)

* Subsidizing private coverage and expanding public coverage for lower- and moderate-income families alone (the reforms in the legislation) are not sufficient to stem the increases in high financial burden

The insurance reform legislation is now law, but the measures “are not sufficient to stem the increases in high financial burden.” There is no law against passing a new law. Do we live with the increasing financial burdens of this law, or do we eliminate the financial burdens by enacting an improved Medicare for all?