Despite Recession, Share of Americans with High Medical Costs Mostly Unchanged

Lower Spending on Prescription Drugs Helped Offset Declining Family Incomes Between 2006-2009

News Release
Oct. 24, 2012

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—Almost one in five Americans younger than 65—18.8 percent—lived in families with high medical costs in 2009, roughly the same as 2006 despite widespread job losses, more uninsured and declining incomes during the Great Recession, according to a study by the Center for Studying Health System Change (HSC) published today as a Web First by Health Affairs.

Supported by the Commonwealth Fund, the study defined high medical cost burden as spending more than 10 percent of before-tax family income out of pocket on health insurance premiums and medical care. In the study, HSC Senior Fellow Peter J. Cunningham, Ph.D., analyzed data from the Medical Expenditure Panel Survey (MEPS) for 2001 and 2006-09. Sample sizes of about 28,000 people aged 65 and younger were included for each of the survey years.

The study, detailed in a Health Affairs’ article titled “Despite the Recession’s Effects on Incomes and Jobs, the Share of People with High Medical Costs Was Mostly Unchanged,” found that the lack of change in high medical cost burden reflected both declines in family income—from about $65,000 on average in 2006 to $61,000 in 2009—and decreases in out-of-pocket spending for health services—from $1,454 in 2006 to $1,231 to 2009.

“Almost the entire decline in out-of-pocket spending for services reflects lower spending on prescription drugs, which dropped from $258 a person in 2006 to $162 in 2009,” Cunningham said. “And, because the lower drug spending wasn’t explained by declining use, the likely explanation is increased use of generic drugs.”

Other key study findings include:

• During 2006-09, average out-of-pocket family spending on health insurance premiums remained steady at about $1,800 annually, possibly reflecting a shift to plans with lower premiums.
• About 18 percent of people with employer-sponsored insurance had high medical cost burdens in 2009, and more than half of people with nongroup private insurance (52.9%) spent more than 10 percent of income on health insurance premiums and health services.
• The proportion of people with public coverage and high medical cost burdens declined between 2006 and 2009, from 20 percent to 16.7 percent.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research.