Medical Expenditure Burdens: The Impact of Tax Subsidies, Within-Year Expenditure
Concentration, and More
Thomas M. Selden
Division of Modeling & Simulation
Center for Financing, Access and Cost Trends

Why Study Burdens?




Most families healthy in given year
Illness, however, is a fact of life
Medical bills pour in just when families must grapple with illness, seeking care, care-giving, and possibility reduced earnings
Accurate burden measurement a key ingredient for sound public policy

Data
 Medical Expenditure Panel Survey (03&04)
 <65 population
– Medicare Part D

Conventional 20% Burden Measures
(OOP Care + OOP Prem > .2*Y Disp )
25
20
15
20.9
10
7.3
5
0
Poverty Level
*Essentially same as Banthin&Bernard (JAMA 06)
All
0-100
100-200
200-300
300-400
400-600
>600

Annual 20% Burdens vs. Self-Reported
“Bill Problems”
Adults Age 19-64 in 2003
50
45
40
35
30
25
20
15
10
5
0
MEPS
>20% Burden
Commonwealth
Fund
"Bill Problems"

“Bill Problem” Responses Might
Reflect Lower Thresholds
30
25
20
15
10
5
0
50
45
40
35
>40%
>15%
>5/10%
MEPS
>20%
>10%
>5%
"Bill Problem"

3 Refinements




Impact of tax subsidies
Intra-year burdens
Burden of uncompensated care
None previously studied

Impact of Tax Subsidy

Summary
 Tax subsidies modestly reduce burdens
– Especially subsidies for premiums
 Lowers burden prevalence (7.3% to 6.2%)
 Little benefit for poor

The Impact of Within-Year Expenditure
Concentration

Within-Year Family Expenditure
Concentration
50
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12
Ranked Months
Total Out-of-Pocket
Note: Families with zero expenditures excluded

Peak Month as Percentage of Annual
Total, by Poverty and Expenditure
70
60
50
40
30
20
10
0
<1
00
10
0-2
00
20
0-3
00
30
0-4
00
40
0-6
00
>6
00
Poverty Level
Total Out-of-Pocket
70
60
50
40
30
20
10
0
<1
K
1K
-5
K
5K
-1
0K
Total Expenditure
Total Out-of-Pocket
>1
0K

Intra-year Burdens?
 Precautionary savings are low
– 24% of bottom quintile have assets no liquid
– Median among those with assets=$600
 Earnings down when expenditures spike
– Expenditure spikes play larger role

Within-Year Burdens (20%)
25
20
15
10
5
0
50
45
40
35
30
15.5
6.3
25.7
A ll
36.3
42.7
20.5
1.1
0-1
00
10
0-2
00
20
0-3
00
30
0-4
00
40
0-6
00
>6
00
Annual Quarterly Monthly

Burden of Uncompensated Care




CWF “bill problem” includes inability to pay
UC can indeed be burdensome
– Medical debt
–
–
–
–
Credit problems
Access problems
Stigma
All ignored by conventional burden analyses
Not observed, but…
– WTP (avoid UC burden) < UC

Bounding 20% Annual Burdens for Uncompensated Care
30
25
20
15
10
5
0
ALL
Upper Bound
Lower Bound

Monthly Burdens (20%)
60
50
40
30
20
10
0
ALL
Upper Bound
Lower Bound

UC Conclusions



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Modest increase in prevalence
– Families “pay until it hurts”
Concentrated among poor
Importance of measuring medical debt
Monthly UC-adjusted burdens approach
“bill problem” frequency
– 29% versus 32% among adults in 2003

Conclusions



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Tax subsidies modestly reduce burdens
– Mostly among middle income
Narrowing “budget window” increases burden prevalence, especially among poor
UC modestly increases burden prevalence, again mostly among poor
Refinements greatly increase regressivity

Type of Service Distribution in
High-Burden Month
100%
80%
60%
40%
20%
0%
A
LL
<1
00
10
0-2
00
20
0-3
00
30
0-4
40
00
0-6
00
>6
00
*Conditional on having 20% burden
HOSP
ER
AMB&OTH
DENT
RX
PREMIUM