Family Financial Pressures
From Medical Bills:
Implications For Health
Reform
Peter Cunningham
Presentation for AcademyHealth Annual Research
Conference, June 28, 2009, Chicago
Introduction
 Financial pressures from health care costs
increasing for families
 Affordable health care is major goal of health
reform
 Lack of consensus on how to define or measure
affordability
 Information on family perspective not available
Objectives
 Examine affordability from the perspective of
families
 Identify extent of financial stress at different levels
of out-of-pocket
out of pocket spending
 Changes in financial stress over time
 Contributors to financial stress other than out
out-ofof
pocket expenses
Data From Household Surveys
 Nationally representative surveys – funded by RWJF
• 2003 CTS Household Survey – based on sample of 60 sites
• 2007 Health Tracking Household Survey – based on
nationally representative sample
 Study sample includes nonelderly with ESI coverage
• n = 27,000 for 2003
• n = 8,200
,
for 2007
 Independent measures of perceived financial stress and out-
of-pocket
f
k t spending
di iin pastt year
Measure of Financial Stress
 During the past 12 months
months, have you had any
problems paying medical bills?
 Followup questions identify consequences,
tradeoffs associated with medical bill problems
 Financial stress and out-of-pocket
out of pocket spending
observed at family-level.
• Analysis
y
is at p
person-level ((familyy measures linked to
persons)
Trends in Financial Stress, Spending,
and Income
2003
2007
% medical bill problems
12.5
15.4*
Out-of-pocket
Out
of pocket spending
$961
$1 318*
$1,318
2.2
2.8*
$80,800
88,900*
% medical bill problems
20.1
27.3*
Out-of-pocket spending
$890
$1,080*
3.8
5.3*
$37 100
$37,100
$37 300
$37,300
All persons with ESI coverage
Spending relative to income
Family income
LT 300% of poverty
Spending relative to income
Family income
*Change from 2003 is statistically significant at .05 level
Financial Stress Increases With
Spending
Percent with medical bill problems
60
50
47 47
38
40
30
10
41
2003
27 26
20*
20
15
5
4
6
5
0
0
0-1.0
1.0 - 2.5
2.5 - 5.0
5.0 - 10.0
10.0 +
Out-of-pocket spending relative to family income
*Change from 2003 is statistically significant at .05 level
Source: 2007 Health Tracking Household Survey
2007
Income < 300% of poverty
Percent with medical bill problems
60
50
46
45
48
40
40
31*
32 31
2003
30
20
10
2007
19
16*
8
6
9
0
0
0-1.0
1.0 - 2.5
2.5 - 5.0
5.0 - 10.0
10.0 +
Out-of-pocket spending relative to family income
*Change from 2003 is statistically significant at .05 level
Source: 2007 Health Tracking Household Survey
Explaining Increase in Financial Stress
 Do increases in spending alone account for
increase in financial stress?
 Regression-based decomposition analysis
• Change due to observed characteristics (e
(e.g.
g out-ofout of
pocket spending)
• Change due to unobserved characteristics (e.g.
regression coefficients)
Model Specification
 Estimate equivalent models for 2003 and 2007
 Probability of medical bill problems as dependent
variable
 Independent variables
• Demographics (age, gender, race/ethnicity, family type)
• Health status, chronic conditions
• Census region, urban/rural indicators
• Family income
• HMO enrollment
• Annual out-of-pocket spending
Simulating Increase in Medical Bill
Problems for 2007
Percent with Medical Bill Problems
All ESI
< 300% FPL
2003
12.5
20.1
2007 (actual)
15.4
27.3
2007 (assuming no change in
spending)
14.1
25.9
2007 (assuming no change in all
observed characteristics)
14.6
26.1
Other Factors Associated with More
Medical Bill Problems
 Health plan design and benefits
• Non-HMO enrollment
• Lack of prescription drug benefits
• High deductible plan with no HSA
 Economic environment
• Doubling of home foreclosure rates in past year
• High unemployment in area
Conclusions
 Financial stress from medical bills increasing
• Likely has become much worse since 2007
 Higher spending explains only one-third of the increase in
financial stress
 One fourth experience financial stress at even modest levels
of out-of-pocket
p
spending
p
g
 Spending thresholds associated with financial stress change
over time
Implications for Policy, Health Reform
 Important to take into account spending for services in
determining affordability standards
 Out-of-pocket
O
f
k spending
di maximums
i
used
d iin M
Medicaid,
di id CHIP (5
percent of income) may be too high
 Can all financial stress from medical care expenses be
eliminated?
• Need to define levels of affordability that are sustainable
• Prioritize on low income populations
• Delivery
y system
y
reform also needed to reduce financial burden
of medical care