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Out-of-Pocket Spending

By February 6, 2015Commentary

What really matters to most Americans in regard to health care costs is how much they have to spend out of their financial resources, whether in premium sharing or cost-sharing at the time of service.  And the prospect of paying significant cost-sharing is what causes financial anxiety for most people.  Research in Health Affairs examines trends in cost sharing between 2007 and 2010, using a combination of MEPS survey data and other information sources.   (HA Article)   In 2010, out-of-pocket spending was $306.2 billion or almost 12% of all health expenditures.  Consistent with an overall slowdown in health spending growth, from 2007 to 2010 out-of-pocket costs grew 1.4% on average per year, down from 5.3% average annual increases from 2004 to 2007.  Among subgroups, however, the only one that experienced an increase were those persons with private health insurance.  The uninsured saw a significant decline in their out-of-pocket spending (which by definition is most of their health care costs), as did Medicare and Medicaid recipients.   In 2010, those with employment-sponsored insurance accounted for 43% of all out-of-pocket expenses and saw growth of 4.1% in those expenses, although from 2007 to 2010 the average annual increase was 2.4%.  We know from other sources that out-of-pocket spending for this group has continued to rise since 2010, particularly as high-deductible plans spread.  Although Medicare beneficiaries represent only 15.6% of the population, they incur 40% of out-of-pocket spending, although their per beneficiary spending has been flat the last few years.  Finally, the Medicaid population, which is much larger than the Medicare one, has relatively low out-of-pocket spending and also has seen no increase in those costs.

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