Higher Premiums, Out-Of-Pocket Costs Drive Higher Health Care Financial Burden

The nearly 180 million Americans with private health insurance coverage have experienced increased premiums and decreased benefits. However, little is known about how changes in privately insured families’ contributions to insurance premiums and out-of-pocket spending have affected the financial burden of health care over the past two decades.

“This issue is particularly salient for those with low incomes, who are more susceptible to debt, bankruptcy and worse health outcomes due to poverty,” according to a study reported in JAMA Internal Medicine. “Understanding changes in the financial burden of health care has important implications for patients and policymakers, who have made addressing care affordability a priority.”

Researchers used Medicare Expenditure Panel Survey data from 2007 to 2019 for respondents and family members younger than 65 with private insurance. Families’ total health care spending was calculated as contributions to premiums plus out-of-pocket medical and prescription drug spending. Families’ annual financial medical burden was assessed by dividing total health care spending by post-subsistence income, which is income minus estimated food costs.

The inflation-adjusted mean total health care spending by privately insured families increased from $3,920 in 2007 to $4,907 in 2019, largely because of higher premium contributions. This increase affected all income groups:

  • Among low-income families, mean total health care spending was $3,163 in 2007 and $3247 in 2019.
  • Among higher-income families, mean total health care spending increased from $4,071 in 2007 to $5,239 in 2019.
  • The mean financial medical burden was more than 26% of post-subsistence income for low-income families, compared with approximately 6% for higher-income families.
  • Although premiums increased across all income groups, out-of-pocket spending remained stable over time.

The findings highlight the need to strengthen financial safeguards for low-income families, including those that do not meet enhanced state definitions of Medicaid eligibility and are considered well-resourced enough to rely on private insurance, researchers said. Furthermore, these results suggest that without stronger emphasis on regulating premiums, controlling out-of-pocket costs is necessary but not sufficient to alleviate the burden of health care.

“Factors underlying increasing premiums include aging enrollees with increasing utilization, increasing administrative and specialty drug costs, market consolidation and insurers’ interests in profitability,” the report concluded. “Policymakers might consider strengthening income-based subsidies, improving drug price negotiation and bolstering antitrust scrutiny to help contain the costs of premiums.”


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