Peter J. Cunningham
P. J. Cunningham, “The Share of People with High Medical Costs Increased Prior to Implementation of the Affordable Care Act,” Health Affairs, Jan. 2015 34(1):117–24.
The percentage of Americans who spend more than 10 percent of their family income on out-of-pocket health care expenses increased to 19.2 percent in 2011, from 18.2 percent during 2007–09. Medical cost burdens were highest for people with private nongroup insurance coverage, who are among those most likely to benefit from the Affordable Care Act’s coverage expansions.
In addition to providing access to health insurance for many of the uninsured, the Affordable Care Act is helping to make coverage more affordable than it was previously for many individuals and families, particularly for those with nongroup coverage. With risk spread broadly among those participating in the insurance marketplaces, premiums have generally been kept in check. Subsidies have minimized costs for people with lower incomes, while individuals with serious health problems have been protected by rules restricting insurers from charging higher premiums or denying coverage altogether. Such provisions could help narrow the affordability gap between those with employer-provided coverage and those buying insurance on their own. This Commonwealth Fund–supported study examines medical cost burdens for people younger than 65 for 2010–11, just before the health reform’s major coverage provisions went into effect. The analysis looks at people with different types of coverage—or none at all—and at spending for a variety of services, like physician visits or hospital care.
“[M]any people with nongroup coverage before 2014 will be able to dramatically lower their health insurance and health care spending through the marketplaces,” researcher Peter Cunningham concludes. Just over half of people with nongroup coverage in 2009–11 had family incomes at or under 400 percent of the federal poverty level, making them potentially eligible for the marketplaces’ premium subsidies and a substantial reduction in their cost burden. For instance, adults in families with incomes between 138 percent and 250 percent of poverty spend an average of $5,435 for coverage; buying coverage through the marketplace could reduce that price tag by two-thirds, to $1,797.
The analysis was based on data from the 2001–11 Medical Expenditure Panel Surveys (MEPS), sponsored by the Agency for Healthcare Research and Quality. Family medical cost burden was defined as the ratio of total out-of-pocket spending for health care services and premiums to total family income. People who spent more than 10 percent of family income on health care were identified as having a high cost burden.
The percentage of people with high medical costs burdens increased from 2007–09 to 2011, with burdens highest for people with private nongroup insurance. The Affordable Care Act’s coverage provisions are likely to substantially reduce these cost burdens for many people.