1
Consumer Experiences
with Health Care Costs
Consumer Reports National Research Center
Overview:
We conducted an online survey of a nationally representative sample of 1,000 respondents
about their experiences with and attitudes towards the U.S. health care system
Some key demographic characteristics of the sample are:
• Median household income is $59,000
• Median age is 47
• 29% are college graduates
• 52% are women
• 66% are white, 15% are Latino, and 12% are African-American.
We also conducted a supplemental survey of 500 heavy users of health care services
and 500 uninsured respondents.
Key Findings:
• The typical U.S. household spent about $600 out of
pocket for health services in 2013 (excluding premium payments), but 12% of households spent $5,000
or more.
• Two-fifths of households experienced surgery or
hospitalization within the past two years. The median
out-of-pocket cost for households that experienced
multiple surgeries within the past two years was
about $1,500.
• A sound majority of respondents accepted their
out-of-pocket health expenses as justifiable, until a
threshold of $2,500 in spending is crossed
• There is overwhelming support for requiring
hospitals and insurers to provide more up-front cost
estimates to consumers weighing health decisions.
• Consumers felt health insurance and drug companies were profiting excessively from the system, but
they looked primarily to the federal government to
reduce costs
• The public also supports other actions to help rein
in costs, including standard prices for drugs, standard payment for specific medical procedures, fixed
monthly fees instead of payment for each service.
• Consumers gave an overall grade of B- to the U.S.
health care system, and grades of C+ for fairness
and C for affordability.
2
Health Spending:
Respondents spent a median of $602 on health care in 2013, not counting health insurance premium
payments. This estimate excludes the 15% of respondents who indicated they had not obtained any health
services in 2013. Those who had not used health services had the following characteristics
• Lower household incomes - 30% of those with household incomes less than $35,000 did
not use health services compared to 4% of those reporting incomes of $100,000 or more.
• Non-college graduates -19% of non-college graduates did not obtain health services, compared
to just 3% of college graduates.
• Uninsured - 39% of the uninsured did not use health services, compared to 15% of insured
consumers.
• Younger - 21% of those under the age of 35 did not use health services compared to 11% of
those 65 and older.
Twelve percent of all consumers indicated they had spent $5,000 or more out of pocket for medical services.
Our multivariate analyses identified these factors, in order, as the main predictors of out-of-pocket expenses:
number of surgeries, income, age, number of hospitalizations, type of insurance, and race.
Usage of Health
Services
We categorized two-fifths (42%) of respondents as
heavy users of health services because their households experienced either surgery or hospitalization
within the past two years. This group accounted for
46% of all consumers who used health services in
2013. One-fifth of all light users actually used no
health services in 2013.
Heavy users had out-of-pocket expenditures in 2013
(a median of $927) more than twice as high as those
of light users (median of $413), and they were nearly
three times as likely (16% versus 6% for light users)
to have incurred out-of-pocket expenses that
exceeded $5,000.
Heavy Users
42%
Light Users
58%
Heavy vs. Light Users
3
The graph below illustrates the impact of surgeries on out-of-pocket costs. Expenses of $5,000 or more are
primarily explained by multiple surgeries or hospitalizations.
Median Out-of-Pocket Household Health Costs by Number of Surgeries
$1800
$1600
$1550
$1400
$1200
$1000
$952
$800
$600
$400
$440
$200
$0
None 70%
One 19%
Two or More 11%
Types of Health Insurance
Types of coverage greatly affected out-of-pocket expenses. Those covered by Medicaid and Medicare had
the lowest health cost burdens, whereas privately purchased plans and plans from previous employers
(typically insuring retirees not yet enrolled in Medicare) least protected consumers from health costs.
Median Household Out-of-Pocket Expenses by Type of Health Plan
$1400
$1200
$1282
$1000
$857
$800
$672
$600
$453
$400
$200
$69
$0
Private
Plans
Previous
Employers
Employer
Based Plans
Medicare
Medicaid
4
Reported out-of-pocket household costs were higher for more affluent households.
Median Out-of-Pocket Household Expenses by Median Household Income
$900
$800
$788
$700
$662
$657
$600
$500
$400
$300
$363
$200
$100
$0
Under $35,000
Under
$35,000
$60,000 to
$100,000+
$60,000 to
$99,999
$100,000+
$35,000 to
$99,999
459,999
$35,000 to
$69,000
Strong disparities are also apparent between white and non-white consumers. Even after controlling for age,
type of health insurance and income, white consumers spent twice as much out-of-pocket as non-whites.
This finding merits further exploration
Median Out-of-Pocket Household Health Costs by Race
$900
$800
$700
$740
$600
$500
$400
$395
$300
$348
$200
$100
$0
Whites
Blacks
Latinos
5
Younger consumers pay less out-of-pocket than older consumers through the age of 64.
At that point, Medicare has a mitigating effect on out-of-pocket expenses.
Median Household Out-of-Pocket Medical Expenses by Age of Respondent
$800
$700
$702
$600
$616
$602
$500
$400
$487
$300
$200
$0
18-34 years
35-44 years
45-64 years
65 years+
Tolerance for Out-of-Pocket Expenses
Tolerance for out of pocket expenses was highly correlated with the size of the expense. Nonetheless, the
public seems to have a vast tolerance for sizeable out-of-pocket health expenditures. Two-thirds (65%)
characterized their expenses as justifiable. Even 60% of heavy users expressed this perspective. The graph
below demonstrates that the majority of respondents accepted their costs as justifiable until the threshold of
$2,500 is crossed.
Household Out-of-Pocket Costs
Assessments of Out-of-Pocket Costs by Amount Spent
Under $100
64%
19%
10%
7%
Totally Reasonable
Expensive but Justifiable
Expensive and not Justifiable
$100 to $499
51%
$500 to $2499
23%
Over $2500
16%
0%
27%
38%
26%
20%
14%
29%
10%
42%
40%
60%
8%
16%
80%
100%
Totally Unreasonable
6
Spending Deterred
Our survey found that consumers are deterred from spending more by the constraints of their health plans.
One-third (35%) of all consumers indicated they had postponed doctor visits, tests, filling prescriptions, or
surgery due to cost in 2013. Consumers who had already spent the most were more inclined to have postponed medical treatment due to cost.
Percent of Consumers Who Postponed 2013 Medical Treatment
Due to Cost by 2013 Out-of-Pocket Expenses
60%
52%
50%
42%
40%
30%
20%
24%
10%
20%
0%
Under
$100
$100 to
$499
$500 to
$2499
$2500+
This finding suggests that those with the greatest medical needs had reached a financial ceiling that denied
them comprehensive treatment. An alternative perspective might suggest that health plans successfully
corralled spiraling health costs.
Inadequate health plan coverage may force respondents to make critical choices between obtaining medical
treatment at personal expense or foregoing medical treatment due to cost. A metric used in a prior survey to
gauge the adequacy of health plans was used to assess current plans. We found that 50% of Americans with
insurance are probably under-insured. They have health coverage that does not fully meet their self-defined
medical needs.
7
The Under-Insured
We evaluated the adequacy of health insurance coverage based on consumers’ responses to the set of
statements shown below
Percentage of Consumers Who Described a Statement About
Their Current Plan as Accurate or Inaccurate
The deductible is too high
52%
48%
The premium is too high
51%
49%
Does not provide enough coverage for catastrophic
42%
58%
Does not adequately cover the costs of surgery
40%
60%
Does not adequately cover the costs of med tests
38%
62%
Does not adequately cover prescription drug costs
36%
64%
Does not adequately cover the costs of doc visits
31%
69%
Does not have adequate network of docs/hospitals
29%
71%
0%
20%
Accurate
40%
60%
80%
100%
Inaccurate
Consumers were asked to evaluate how well each statement described their current health plan. Two or
more “accurate” responses to these six items (we excluded responses to the premium item and the network
item this calculation) signal that the plan is one that under-insures the consumer. The usefulness of this
classification is illustrated by the breakdown of postponed treatments as well as several other key points that
follow.
8
When well-insured and underinsured consumers are compared, one of the main differences is that under-insured Americans are more likely to postpone needed medical care than well-insured Americans. In fact, they
resemble the uninsured by this measure more than the well-insured. The underinsured were two and
one-half times more likely to have postponed medical treatment than the well-insured. Nearly half (46%) of
the underinsured denied themselves medical treatment for reasons of cost.
Percentage of Consumers Who Postponed Medical Treatment
by Adequacy of Health Insurance
70%
66%
60%
50%
46%
40%
30%
20%
10%
17%
0%
Well-insured
44%
Under-insured
44%
Uninsured
12%
Adequacy of Health Coverage
Underinsured consumers spent 52% more for out-of-pocket health costs in 2013 than well-insured respondents (medians of $715 compared to $474). They were more than twice as
likely as well-insured respondents to have spent $5,000 or more out-of-pocket (16% compared to 6%).
Although they were slightly less likely than well-insured respondents to have been heavy users of the system
and reported similar household incomes, underinsured consumers were twice as likely (12% to 6%) to have
had unpaid bills sent to collection agencies.
9
Finally, underinsured consumers were significantly less likely than well-insured consumers to say they were
financially prepared for a major medical expense. Two-thirds of the well-insured indicated their households
would be prepared financially for such a major medical expense, compared to 45% of the underinsured and
18% of the uninsured. One-third (32%) of well-insured consumers indicated they were well prepared for such
a circumstance, compared to only 17% of the underinsured.
The graph below indicates that underinsured consumers occupy a health insurance status squarely in the
middle between well-insured respondents, who are relatively confident of their capacity to respond to a crisis,
and the more calamitous position of the underinsured.
Levels of Financial Preparedness for Unexpected Medical Expense
100%
90%
80%
18%
16%
12%
16%
16%
11%
18%
17%
16%
34%
50%
40%
4%
3%
34%
70%
60%
16%
14%
29%
14%
30%
20%
12%
10%
11%
10%
48%
10%
10%
10%
0%
Total Population
Well-insured
Under-insured
Completely Prepared
Very Prepared
Fairly Well Prepared
Somewhat Unprepared
Very Unprepared
Completely Unprepared
Uninsured
None of the standard demographic variables explain differences found between the well-insured and the
under-insured. There are no systematic predictors of adequacy of coverage among those covered by
employer-provided plans. Differences in adequacy of coverage derive from the options employers make
available to employees.
Perceptions of Key Health Care Institutions
Most consumers believe that key health care stakeholders are profiting excessively from the health care
system. Health insurance companies (34%) and drug companies (26%) were the two institutions branded most
frequently as villains on this score. Doctors (12%) and hospitals (10%) lagged far behind. Just one of every
seven respondents believed that none of the key players in the health care industry have profited excessively
from the health care system.
On a related item, half of all consumers cited one of two institutions as those bearing the most responsibility
for higher health costs: 1) health insurance companies (28%); and 2) the federal government (24%). Drug
companies (16%) and hospitals (11%) were also selected by ten percent or more of the sample. Consumers
have much more confidence in the federal government as the institution that should fix rising health costs,
however.
Which ONE of the following would you say has
profited MOST excessively from the health care system?
Health insurance companies
34%
Drug companies
26%
Hospitals
10%
Specialist doctors
7%
Primary care doctors
5%
Medical device manufacturers
2%
Other
2%
None of the above have profited excessively
14%
10
11
In a closely related question, half of all consumers cited one of two institutions as those bearing the most
responsibility for higher health costs: 1) health insurance companies (28%); and 2) the federal government
(24%). Drug companies (16%) and hospitals (11%) were also selected by ten percent or more of the sample.
Despite being fingered as a cause of high costs, consumers have much more confidence in the federal government as the institution that should fix rising health costs, compared to other entities.
Who Should Fix the Broken System?
50%
45%
41%
40%
35%
30%
28%
25%
20%
22%
24%
15%
15%
10%
5%
3%
0%
Federal
Government
Health Insurance
Companies
13%
11%
4%
4%
5%
Most Responsible for Higher Health Care Costs
2%
1%
Consumers
Hospitals
Drug
Companies
4%
Doctors
Medical Device
Manufacturers
Should Have Most Responsibility for Fixing Rising Health Care Costs
Two-fifths (41%) selected the federal government as the entity they entrust to fix rising health costs, compared
to just 22% who selected health insurance companies,. An additional 10% selected state governments as an
instrument of repair. Even among those who blamed the federal government as the main culprit for rising
health costs, the plurality (47%) named the federal government as the best hope for repairing the system.
12
Specific Remedies
Consistent with the findings reported above, consumers expressed extraordinarily high levels of support for a
variety of proposed actions to remedy the ailments of the health care system. Eight of the ten policy prescriptions specified in the survey were given emphatic approval by 80% or more of consumers. For example:
• 86% of consumers endorsed standard prices for drugs
• 86% believed drug companies should be prohibited from charging U.S. consumers more than
they do for drugs overseas.
• More than 80% favored standardized payments to hospitals and doctors for the same procedures.
• Three-fifths (60%) agreed that doctors and hospitals should be paid a fixed monthly fee for patient
care, instead of being paid for each procedure performed.
Public Opinion Toward Specific Potential Government Action
Agree Strongly
Agree
Disagree
Disagree Strongly
48%
Prohibit Rx firms from charging more in US than abroad
45
41
Require hospitals and doctors to provide up front estimates
40
53
5
2
Require insurers to provide upfront estimates to consumers
40
52
5
3
Show what a fair price would be for specific procedures
39
52
6
3
Set standard prices for drugs to make them affordable
38
48
10
4
Make it easy to switch plans if a network drops their doctor
36
54
8
2
Set standard payment to hospitals for specific procedures
32
53
11
4
Set standard payment to doctors for specific procedures
29
54
14
4
Make med school free/cheaper to deal with MD shortages
20
Pay doctors and hospitals a fixed monthly fee per patient
16
0%
53
44
20%
40%
11
22
33
60%
80%
3
6
8
100%
Percentage and Intensity of Agreement/Disagreement with Statements
We caveat these findings by noting that support for a given reform depends heavily on how it is framed.
13
The Public’s Sense of a Malfunctioning System
Support for reforms of the health care system are fueled by the public’s keen understanding that it is not
functioning fairly or in the public’s best interests.
Opinion on Some General Statements About the Health Care System
Agree Strongly
Agree
Disagree
Disagree Strongly
Patients need info about quality & cost to make best choices
37
56
48%
5
2
Patients deserve reliable info on prices from independent source
38
54
48%
6
2
Hospitals should be required to publish report cards on their safety & quality of care
38
52
8
2
Same procedures done in different hospitals in same city should cost the same
35
50
Hospitals and doctors who do a poor job should face a penalty
25
High quality health care only available to those who can pay for it
22
For same procedure in same city, the price of care doesn’t vary much
6
For same procedure in same city, quality of care doesn’t vary much
5
High prices reflect higher quality health care
4
Hospitals ought to be able to charge whatever they want
0%
50
2
41
24
20%
12
23
48
23
50
32
33
11
6
35
45
14
5
28
26
4
20
44
12
Hospitals and doctors who do the best job should get a bonus
11
54
40%
60%
80%
100%
Percentage and Intensity of Agreement/Disagreement with Statements
Among the key findings:
• Two-thirds concurred that for the same procedure
in the same city, the quality of care and the price
may vary substantially.
• But 65% sensed that quality care is available only
to those who have the means to acquire it.
• 86% disapproved of such variation in prices for the
same procedures in the same city.
We found that consumers are more inclined to apply
“the stick” rather than offer “the carrot” based on the
quality of care provided by doctors and hospitals:
• 88% rejected the notion that hospitals should be
able to charge whatever they like for their services.
• 75% agreed that poor quality of care should result
in penalties for health professionals
• 81% recognized that cost does not necessarily
connote quality.
• Only 53% warmed to the prospect of rewarding
quality care with bonuses.
14
Real-World Scenario Reactions
One set of questions included in the survey originated from a set of real-world examples exposed by journalists. They were treated as obviously outrageous vignettes by the writers who first reported them. We decided
to quantitatively gauge public reaction to these examples.
Consumer Perspectives on Some Real-World Health Care Scenarios
Tylenol pill price of $37.78 in hospital
5
7
16
75
Dr. Jones orders MRI test because he’s co-owner of MRI machine
2
9
25
64
Hep C treatment regimen for $86,000
3
Uninsured pays $1500 for infected finger
5
Two hospitals pay $1.5 million for MRI in same city
8
Doctors fees set by governments - same price for each patient
0%
16
16
34
46
30
49
27
39
42
32
20%
26
40%
15
60%
80%
11
100%
Totally Acceptable and Fair
Mostly Acceptable and Fair
Mostly Unacceptable and Unfair
Totally Unacceptable and Unfair
We found that 91% viewed a Tylenol pill with codeine priced at $37.78 in a hospital as unacceptable and
unfair, and that 80% regarded a six-week drug treatment for hepatitis C billed at $86,000 as likewise unacceptable and unfair. These findings quantify the impressive unity of public disdain toward practices that occur with
regularity in the health care sphere.
15
Health Care Delivery Reform
Our survey assessed public attitudes toward some key elements of health care delivery reform proposals. The
sample was shown paired choices and asked to select the option they would prefer. Overall, respondents
preferred the solution that minimized their out-of-pocket costs. Results appear below.
Preferences of Consumers Among Paired-Choice Alternatives
A new generic drug has just been released. Do you switch to the generic drug
that costs $10 OR stay on your brand name equivalent drug that costs $35?
Switch to generic drug that costs $10
88%
Stay on brand name drug that costs $35
12%
A smaller network of doctors/hospitals in your health plan at lower cost to you
OR a larger network of doctors/hospitals at a higher cost?
Smaller Network/Lower Cost
76%
Larger Network/Higher Cost
24%
Access to less well-known but qualified specialists at a lower cost OR
access to the best-known specialists at a higher cost?
Less well-known but qualified specialists at lower cost
71%
Best-known specialists at higher cost
29%
Getting an expensive medical test where you have a 10% chance of having a
serious condition OR delaying getting the test and monitoring your condition
for a few weeks to see if symptoms go away on their own.
Monitoring condition for a few weeks
71%
Getting the expensive test
29%
Getting an antibiotic prescription for an illness diagnosed as a virus
OR not getting the antibiotic and letting the virus run its course.
Letting the virus run its course
52%
Getting the antibiotic prescription for virus (FN)
48%
In each of the five paired comparisons offered, a majority of consumers selected the more efficient option from
a system delivery perspective. Consumers were most comfortable with generic drugs compared to
brand-name drugs (88% would switch to a cheaper generic medicine), and least comfortable with eschewing
an antibiotic for a condition known to be a virus (48% would opt for the antibiotic rather than let the virus runs
its course without treatment). The survey did not inform respondents that antibiotics are ineffective against
viral illnesses.
16
In the remaining three examples, about one-quarter of consumers expressed a preference for the less-efficient
alternative�—larger networks, better-known specialists, and getting expensive medical tests for a condition
they most likely did not have, rather than monitoring their conditions for a few weeks to determine if symptoms
disappeared without medical intervention.
Final Grades
Our survey asked consumers to assign grades to some main attributes of the health care system as well
as an overall grade. Grades shown reflect the mean scores. The national report card issued by the public
is shown below.
Report Card for US Health Care System
Issued by: The American Public
July 2014
Quality of Care
B
Affordability
C
Fairness
C+
Choice of Doctors
B
Ease of Access
B
OVERALL GRADE: B-
There is relatively little variability in these grades for subgroups of the population, although the evaluations
shown below highlight the slightly harsher grades of the uninsured and the slightly more favorable perspectives of consumers over the age of 64.
Report Card for US Health Care System
Issued by: Key Segments of the Population
July 2014
Subjects
Light Users
Heavy Users
All Insured
Uninsured
Well-Insured
Under-Insured
Ages 18-64
Ages 65+
Quality of Care
B
B
B
B
B
B
B
B+
Affordability
C
C
C
D+
C
C-
C-
C+
Fairness
C
C
C+
C
C+
C
C
B-
Choice of Doctors
B
B
B
B-
B+
B
B
B+
Ease of Access
B-
B
B
C+
B
B-
B
B
OVERALL GRADE:
C+
C+
B-
C
B-
C+
C+
B
Methodological Notes
This survey was designed by the Consumer Reports National Research Center and conducted by GfK
Research in July, 2014. The online survey was conducted using the web-enabled KnowledgePanel®, a probability-based panel designed to be representative of the U.S. population.
The survey design also included two supplemental sample groups to ensure ample sample sizes for analysis:
(1) 500 “heavy users” of health care services (2) 500 uninsured respondents. For analysis, these supplement
samples were added to those identified belonging to each group in the original sample of 1,000 resulting in
1,079 heavy users and 620 uninsured.
Sample error for each group at the 95% confidence level is as follows: 1,000 general population +/- 3.3; heavy
users of health care services = +/- 3.3%; uninsured respondents = +/- 5.1%. Initially, participants were chosen
scientifically by a random selection of telephone numbers and residential addresses. Persons in selected
households are then invited by telephone or by mail to participate in the web-enabled KnowledgePanel®. For
those who agree to participate, but do not already have Internet access, GfK Custom research, LLC (including
its subsidiary Knowledge Networks, Inc.) (“GfK”) provides at no cost a laptop and ISP connection. People who
already have computers and Internet service are permitted to participate using their own equipment. Panelists
then receive unique log-in information for accessing surveys online, and then are sent emails throughout each
month inviting them to participate in research.
More technical information is available at http://www.knowledgenetworks,com/ganp/reviewer-info.html.
Funding for this survey was provided in part by The Atlantic Philanthropies.
17