Association for Public Policy Analysis & Management

In recent decades, exploding medical care costs and eroding protections from health insurance have become increasingly recognized as leading threats to household economic security in the United States.  Accordingly, protecting households from financial disruption and the burden of unpredictable, excessive health care costs was an important motivation for the Patient Protection and Affordable Care Act of 2010.   

      The literature on aspects of financial burden in health is vast, yet there are important gaps in research on the comprehensive impact to households.  Efforts by families and the policymakers working on their behalf to improve medical-financial experience can be enabled by illuminating the true magnitude incidence of health care spending.  A reexamination of household spending on healthcare is in order.  The occasion of the passage of major health insurance reforms in 2010 offers a compelling point in time from which to establish an updated baseline understanding and a reference point from which to monitor and improve reform efforts from 2010 and beyond. 

      Within a taxonomy of family types by health, income and insurance status, I analyze data from the 2010 Medical Expenditure Panel Survey along with several additional sources to model household spending on healthcare. I report a multidimensional profile of household medical-financial experience, distinguished by family type.  Estimates of spending are compared to the value of medical services received, and to spending by other types of families.  The analysis portrays important structural variations in the magnitude and nature of risks to financial security faced by different types of American households. Based on the findings, I argue that predominance of spending components such as employer-paid premiums or contributions to public spending through tax payments, both of which are generally invisible to families obscures their true financial burden of health.  Low-income families, expected spending is more unpredictable as well as more burdensome than for upper income families. Health insurance enables access to care, and increases predictability, but it is also associated with a high level of baseline spending independent of health status.

      Families cannot understand or manage spending they cannot predict, cannot control, or for that matter, cannot even see.  The findings in this research illuminate medical-financial experience at a pivotal point in recent history and offer a lens through which to understand the ongoing efforts to refashion health insurance in the United States from 2010 and beyond.