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Health Care Cost Burden for Privately Insured

Among the privately insured, the average costs of health care – premiums and out-of-pocket – are rising, and for low-income families represent more than a quarter of income not dedicated to food. So much for financial protection.

June 3, 2024

Financial Burden of Health Care in the Privately Insured US Population
JAMA Internal Medicine
May 28, 2024
By Sukreth A. Shashikumer et al.

Improving health care affordability is a national priority, including for nearly 180 million individuals with private insurance coverage who have experienced increased premiums and decreased benefits (eg, increasing copayments and deductibles). This issue is particularly salient for those with low incomes, who are more susceptible to debt, bankruptcy, and worse outcomes due to poverty.

This cross-sectional study used 2007 to 2019 Medicare Expenditure Panel Survey data for respondents and family members younger than 65 years with private insurance. Families’ total health care spending was calculated as contributions to premiums plus out-of-pocket medical and prescription drug spending. We assessed families’ annual financial medical burden by dividing their total health care spending by their postsubsistence income (income less estimated food costs).

The unweighted sample included 96075 families. Among low-income families, mean total health care spending was $3163 in 2007 and $3247 in 2019. Low-income families’ medical burden was 23.5% in 2007 and 26.4% in 2019.  Among higher-income families, mean total health care spending increased from $4071 in 2007 to $5239 in 2019. Higher-income families’ medical burden was 5.4% in 2007 and 6.5% in 2019.

In this national cross-sectional study of privately insured US families, inflation-adjusted health care spending increased from 2007 to 2019, largely owing to increasing contributions to premiums. Annual financial burden increased significantly, both overall and among low-income and higher-income families. Mean financial medical burden was more than 26% of post subsistence income for low-income families, compared with approximately 6% for higher-income families.

Our findings highlight the need to strengthen financial safeguards for low-income families, including those who do not meet the enhanced state definitions of Medicaid eligibility and are considered well-resourced enough to rely on private insurance. Furthermore, these results suggest that, without stronger emphasis on regulating premiums, controlling out-of-pocket costs is necessary but not sufficient to alleviate the burden of health care.


Comment by: Don McCanne

Our political leaders who are quite satisfied with our health care system based heavily on private insurance plans (employer-sponsored plans, ACA plans, privately purchased plans, etc.) should make themselves aware of the findings in this relatively simple study. The financial burden of private insurance plans has continued and will continue to creep upward throughout the years, further threatening the affordability of health care, making it an imperative that we do something to stem the tide of increasing private insurance costs, especially for lower-income individuals who are being priced out of health care, experiencing significant medical debt, and suffering medical bankruptcy.

It’s not as if we didn’t understand that there is a way around this dilemma. There are many other defects with the private insurance model, but the most important is that it has been designed to draw off our health care dollars to create wealth for the investors and other intermediaries. Rather, our health care system needs to be financed based on the ability to pay with the funds distributed based on medical need and not for purposes of wealth accumulation.

Of course, that model is the single payer or Medicare for All model of health care financing. Since it would be financed by equitable, progressive taxes, there would no longer be any concern about adjustments in premiums or other cost sharing that would adversely impact lower income individuals. Although the accountants of the extremely wealthy would deal with larger numbers, the amounts would not have a negative impact on their lifestyles.

Instead of listening to the billionaires, Congress should listen to the American Public Health Association:

American Public Health Association

Policy Number 20219

(Excerpt). Single payer is the best option to ensure equity, fairness, and priorities aligned with medical needs. This approach benefits public health, as everyone will have universal access to needed care, with treatment plans based on what works best for the patient. Clinics and hospitals will be free to provide appropriate treatments based on need.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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