Out-of-Pocket Health Care Costs Up

Study: 17 Million Americans Under 65 Spend More Than 10 Percent Of Family Income On Health Care

(WebMD)  Health care costs are digging deeper into Americans' wallets, with 17 million of those under age 65 "underinsured" in 2003, a new study reports.

The underinsured are those who have insurance but still do not have "adequate financial protection" from high out-of-pocket health care costs," according to the study.

In this case, that means the number of Americans under the age of 65 who have insurance but still spend more than 10 percent of their family income on health care.

"We define the underinsured as persons who live in families that spend more than 10 percent of tax-adjusted family income on out-of-pocket health care costs (excluding premiums)," Jessica Banthin, Ph.D., tells WebMD in an email.

Banthin, along with Didem Bernard, Ph.D., were the researchers on the study. Both work at the Agency for Healthcare Research and Quality (AHRQ), a part of the Health and Human Services Department.

The study was published in The Journal of the American Medical Association.

The study reports that nearly 49 million Americans under 65—including those with no insurance—lived in families that spent more than 10 percent of their tax-adjusted family income on health care when insurance premiums were included.

And about 19 million Americans under 65 lived in families that spent more than 20 percent.

Such costs drove some people to delay or skip medical care for financial reasons, the study shows.

Those tough budget choices can have "severe consequences for those in poor health," the researchers write.

Health Care Costs

Banthin and Bernard analyzed data from two large AHRQ studies on health care costs from 1996 and 2003. The 1996 study looked at about 20,000 people under 65; the 2003 study included almost 29,000.

Both studies provided information on family income and health care payments, including health insurance premiums and out-of-pocket expenses.

The researchers focused on the percentage who lived in families that spent more than 10 percent of their tax-adjusted family income on health care.

In 2003, nearly 49 million people were in the 10 percent group. That's almost 12 million more people than in 1996, the study shows.

Meanwhile, 18.5 million Americans spent more than 20 percent of their family income on health care in 2003, up from nearly 13 million in 1996, according to the study.

'Underinsured' Workers

Based on the data, and not including the cost of premiums, 17 million people in the U.S. younger than 65 were "underinsured" in 2003, the researchers estimate.

About 9 million of those underinsured people had private health insurance through employers.

The others had public health coverage or private health insurance not affiliated with an employer or group.

Underinsured people tended to have low incomes and were older, in fair or poor health, disabled or with chronic medical conditions, and without group health insurance.

The data only focused on family income. It doesn't include financial assets such as a home or investments, or financial burdens such as debts.

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SOURCES: Banthin, J. The Journal of the American Medical Association, Dec 13, 2006; vol 296: pp 2712-2719. Jessica Banthin, PhD, Agency for Healthcare Research and Quality. News release, JAMA/Archives.

[bellal-2009]

Why do they separate the cost of insurance and the out of pocket costs. The insurance costs are also part of health care costs. My health insurance alone is 20% of my income, then all the co-pays and extras make about 30-35%. Somebody is paying for the insurance costs, either the consumer or their employer. Let's be clear on what health insurance costs.

[fredhetz]

The entire American healthcare system is heading for a fall at present rate. Managed care has failed to contain costs -- more people are becoming uninsured or underinsured. A country as advanced as the USA should be ashamed of itself.

[bellal-2009]

You could also be "overinsured" then you wouldn't have any after premium costs but you'd be paying more for the insurance. I don't undestand the study.

[bellal-2009]

I choose to be "overinsured" because I've been caught one too many times without enough coverage but some high deductible policies are great especially for younger people.

[bellal-2009]

My advise to 20 somethings; start a Health Savings Account now. They are a great.

[mrboogers]

Why would one exclude premiums for health insurance when computing the percent that families pay for health care? Premiums represent the single largest health care expenditure for over 90% of individuals, including those whose employers pay the tab, since that money comes from the pool of funds which could be used for salary increases.

A self-insured 50-60 year old couple can easily spend $1,000 a month or more for the premiums alone. My wife's employer plan, which covers me as well, charges over $1,000 a month, even if we use no medical services at all.

Tony in Idaho

[kemetorigin]

I concur, premiums and OOP costs should not be separated. Ultimately, they both cost us. The current state of health care is disconcerting at best. I have heard of some employers charging higher premiums to smokers. I wish our employer would do the same to offset the expenses of those of us who make better choices. I would also encourage employers to charge obese employees greater premiums as their health care costs are greater than people of appropriate weight. I should not bear the burden of other people's poor health choices.

[lonestartnow]

I agree. And health care expenses will continue to go up until each of us is willing to take personal responsibility for our health and wellness and make healthier choices. With it's "fix-it" mentality, society has largely ignored prevention and personal responsibility. We know that if--and when--we get sick, "the doctor will fix it, and insurance will pay for it." In reality, we all pay for it. Over 50 percent of corporate profits go toward health care costs. On average, 4 of 5 obese people have at least one costly debilitating illness, and obesity is associated with 53 health conditions, with roughly the same association with chronic health conditions as 20 years of aging.

The National Coalition on Health Care says that in 2005 employer health insurance premiums increased by 9.2 percent, nearly three times the rate of inflation. According to the National Business Group on Health, obesity and overweight and related conditions are estimated to contribute as much as $93 billion to the nation's annual medical bill. Break it down another way, and the economic cost comes down to 39 million lost work days, 239 million days where work activity is restricted, 90 million sick days and 63 million visits to physicians.

It all goes back to personal responsibility and doing what's right for ourselves, our families, and yes--our country. Or, we'll all pay a price we just can't afford.

[heresmy2cent]

The American "healthcare" industry is a bunch of blood-sucking opportunists. There is seemingly no limit to their boldness and greed.

General practice physicians today are little more than "legal" drug pushers who are ever ready to prescribe a pill for every "condition" imaginable so they can get you on some kind of "maintenance" program--all to enrich Merck, Pfizer, etc. into perpetuity. They don't care if you can afford the medication, nor do they care if the medication harms you, as evidenced by the multitude of lawsuits against many of the drug manufacturers.

Our present healthcare system is rotten and needs a complete overall from top to bottom.

[jn122736]

LoneStartNow:

Obviously you don%u2019t have much respect for overweight folks and your comment is misleading at best and downright inaccurate at worst. Numbers can and often are construed to express what ever the writer wants.

%u201COver 50 percent of corporate profits go toward health care costs%u201D

Exxon Mobil Corp. %u2026Profits $10.71 billion for the fourth quarter %u2026and $36.13 billion for the year... Are you saying Exxon spent over $18 billion for health care that year, or even more sense health care is deducted before the bottom line?

Other major corporations including Pharmaceutical companies are also reaping windfall profits because of the monopolies they have over the sale and distribution of their service-products.

It doesn%u2019t matter what you need medical care for, government caps or competition does not control the cost.

It doesn%u2019t matter if you have private or employer provided insurance, Medicare, or simply pay with cash, the costs are totally outrageous and beyond control.

They will remain that way until and unless these monopolies are again forced to break up, as has happened many times in the past, but that cannot happen as long as mega-corps own the government.

[lonestartnow]

jn122736

It's not at all that I don't have respect for "overweight folks." The issue is, and these statistics are correct, when 64.5 percent of adult Americans are categorized as overweight or obese, that's a huge percentage of our population at higher risk for developing serious medical conditions--and insurance premiums / out of pocket health care costs will continue to go up.

[louin0]

High prescription prices are due to the following:
The Greedy Drug Manufacturers who charge us excessively. A lot of the greedy pharmacys, who do the same.
A President who doesn't care about the fate of our old people, but spends trillions on a war that is going absolutely nowhere.

[plane51]

Dont worry.No matter whose side your on,if the government keeps turning a blind eye to the rising healthcare costs, we will surely have universal healthcare.

[alphaa10-2009]

LoneStartNow said, "It all goes back to personal responsibility and doing what's right..."
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Personal responsibility? Dr. Pangloss lives! Or, at least, Christian Scientist Mary Baker Eddy. But no public health science explains the huge increase in health care cost like simple greed. Sensitive to that accusation, LSN wants to distract us with the claim cost is a linear function of a supposedly growing American irresponsibilty.

Exhorbitant health care costs have been a problem for two generations, as health care continues to grow faster than the cost of living. For the last decade, it has been widespread knowledge health care is the next "growth" sector for hot-dog investors. These are the people who want double-digit returns on their money, and want it yesterday.

Never gainsaying the role of controlling personal risk factors, the cost of medical care is imposed by an industry that is anything but competitive, and where huge fortunes are made quietly and without the fuss of wondering how to balance the household food bill, or pay for overpriced medicines.

LSN's comment sounds like the boilerplate of a GOP public relations flak for the so-called "health care industry"-- smoothly semonesque, and almost completely false.