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Recession Made People Adjust Health Choices, Spending

By Rebecca Adams, CQ HealthBeat Associate Editor

October 24, 2012 -- The percentage of families facing high medical costs during the 2007 to 2009 recession did not increase, in large part because many Americans switched from brand-name to generic drugs and may have chosen insurance plans with lower premiums, according to a new study released last week.

The research, published in the journal Health Affairs and conducted by the Center for Studying Health System Change, looked at the number of people whose medical costs exceeded 10 percent of their income. Although unemployment rose in the United States and family income declined from an average of about $65,000 in 2006 to about $61,000 in 2009, the share of their income that went to medical care did not grow during that time.

That differs from what happened earlier in the decade. In 2001, 14.4 percent of Americans under the age of 65 had high medical cost burdens. That proportion rose to 19.2 percent by 2006. However, in 2009 the percentage had trickled down slightly to 18.8 percent. Out-of-pocket spending on health services decreased from an annual average of $1,454 in 2006 to $1,231 in 2009, according to the study.

People began reducing their health care spending before the recession officially hit in December 2007. Between 2006 and 2007, out-of-pocket health spending fell while family incomes stayed about the same, according to the study. For that year, the percentage of people in families with high medical cost burdens went back down a bit, although not to 2001 levels. The share of people with high medical costs dropped from 19.2 percent in 2006 to 17.6 percent in 2007.

“Decreases in out-of-pocket spending for prescription drugs accounted for virtually all of the decrease in out-of-pocket spending on services between 2006 and 2009,” said the study.

Average out-of-pocket spending on prescription drugs decreased from $258 per person in 2006 to $162 in 2009 as several brand-name drugs came off patent and insurers or health plans encouraged people to use generics when available. Out-of-pocket spending did not change significantly between 2006 and 2009 for any other individual service, the analysis found, and patients did not fill significantly fewer prescriptions during that time.

The study noted that the percentage of all prescriptions filled with generic drugs had increased from about 35 percent in 2003 to almost 55 percent by 2008.

People also may have switched to different types of health coverage.

One unexpected finding was that during 2006–2009, people reported that their average out-of-pocket spending on health insurance premiums remained steady, at around $1,800 per year.

“This appears to contradict results from employer surveys that indicate employers shifted more of their health benefit costs onto employees in the form of higher cost sharing for both premiums and services,” the study said. “The fact that the MEPS data showed no change in what families actually spent on premiums may reflect a shift to plans with lower premiums by employees in order to offset the higher overall cost of coverage.”

The study also noted that annual increases in national health spending slowed to 3.8 percent by 2009.

The analysis was based on data from the Medical Expenditure Panel Surveys for 2001 and the period 2006–2009. The Medical Expenditure Panel Survey, with a sample size of about 28,000 people for each year, is sponsored by the Agency for Healthcare Research and Quality.

Rebecca Adams can be reached at [email protected].  

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