Burden of Rising Health Care Costs on Families

ROCKVILLE, Md., Dec. 13 -- Health care costs are gobbling up more family income than they did a decade ago, according to a report from federal researchers.

In 2003, nearly 50 million people lived in families that spent more than 10% of family income on health care, said Jessica S. Banthin, Ph.D., of the Agency for Healthcare Research and Quality (AHRQ) here.

That figure represents an increase of nearly 12 million people with "very high financial burdens for health care" since1996, said Dr. Banthin and co-author Didem M. Bernard, Ph.D., also of the AHRQ, reported in the Dec. 13 issue of the Journal of the American Medical Association.

Furthermore, the number of individuals in families spending more than 20% on healthcare increased by 5.7 million since 1996, for a total of 18.7 million in 2003, the study found.

"Health care costs have been rising faster than the rest of the U.S. economy for many years and take up an increasing portion of the nation's gross domestic product," the authors said. Health care spending represented 16% of the gross domestic product in 2004 compared with 13.6% in 1997 and 9.1% in 1980, according to a previous study, Dr. Banthin and Dr. Bernard said.

The current analysis included both insured and uninsured individuals, but it was restricted to the "non-elderly" -- those younger than age 65. The researchers defined healthcare spending as all out-of-pocket expenditures, including health insurance premiums.

"Although there are many studies that focus on out-of-pocket expenditures for health care goods and services and other studies on trends in premium costs, there are few studies that put all of this information together to examine changes in total out-of-pocket burden for health care and relate it to family income," the authors said.

The researchers analyzed data from the Medical Expenditure Panel Surveys, which are sponsored by the AHRQ. The surveys were administered to about 19,000 people in 1996 and nearly 29,000 in 2003. The household surveys gathered information on health insurance coverage, health care use, healthcare spending, health status, and sociodemographic variables.

Poor people, older people, and those with chronic medical conditions were the most likely to struggle with health care costs, the study found.

For example, one third of those living below the federal poverty line spent more than 10% of their family income on health care in 2003, compared with only about 23% of those with average incomes and 9.7% of those with high incomes.

Furthermore, more than 30% of people age 55 to 65 spent more than 10% of their income on health care, compared with only 14.5% of those ages 18 to 34.

More than 50% of those who had suffered a stroke or other cerebral event were in this high burden category, as were nearly 40% of those suffering from diabetes.

Having health insurance did not necessarily protect one from the onus of high healthcare cost, the study found. Among those with private employment-related insurance, more than 18% faced the 10% total cost burden in 2003, an increase from about 14% in 1996.

Other studies have established that premiums, deductibles, and co-payments have been increasing for those with private insurance through their employer, the authors of the current study noted.

In addition, more people with public health insurance, such as the State Children's Health Insurance Program (SCHIP), had crossed the 10% mark since 1996, the study found In 2003, more than 19% of people with public insurance were in this category, compared with about 15% in 1996.

However, those with private non-group insurance policies bear the weightiest burden, the researchers said. "More than half (53.4%) of non-group coverage incurred total burdens exceeding 10% of family income in 2003, a rate nearly three times greater than that faced by persons with employment-related coverage," the authors said.

That figure has remained about the same since 1996, they said.

"Recent studies have found that the non-group market is small, volatile, and subject to potential market failures," the authors said.

A chief limitation of the study was that it focused on expenditures in particular years and did not examine the persistence of high health care costs over time, the authors said. "Also, our definition of financial burden was based on disposable family income and did not account for assets".

In addition, "we did not attempt to disentangle the complicated causal connections among health status, health insurance status, income, and financial burden," the authors said.

"Policymakers as well as physicians need to understand how rapidly rising healthcare costs are affecting specific groups of patients," the authors said.