Higher health costs and sluggish growth in real incomes mean that families are spending more of their incomes on medical costs. A Fund report by Mark Merlis found that the percentage of households spending 10 percent or more of their income on out-of-pocket health costs rose from 8 percent in 1996–97 to 11 percent in 2001–02.⁽¹⁵⁾ Including premiums, 18 percent of all families spent more than 10 percent of income on health care. With Fund support, Peter Cunningham, Ph.D., of the Center for Studying Health System Change is building on this analysis by examining geographic variation in out-of-pocket cost burdens and medical bill problems during the period 1996–2004, and how these affect access to care.

In related work, Fund grantee Jean Abraham, Ph.D., of the University of Minnesota is estimating the number of insured workers who have high out-of-pocket costs relative to their income—what Fund senior vice president Cathy Schoen has defined as being "underinsured." She will also document how being underinsured varies by size of employer. Both Abraham and Cunningham will develop policy options to make health coverage more affordable for workers and their families.

Health savings accounts (HSAs) combined with high-deductible health plans are part of a trend toward greater consumer cost-sharing. Created as part of the Medicare Modernization Act of 2003, HSAs are available to people who purchase health plans with at least a $1,100 deductible for individuals and $2,200 for families. Plan enrollees and their employers can contribute pre-tax dollars to the accounts and withdraw funds, tax-free, for medical expenses. Known as "consumer-driven" care, such arrangements are based on the theory that greater personal responsibility for health costs will lead to more prudent use of health services.