Healthcare Spending Slowdown Disproportionately Affected Middle-Income, Poor

A new study finds that the most recent pattern of healthcare spending among Americans appears to show a divergence of expenditures trends for the wealthy, middle class, and poor, and because it is seen only among the nonelderly population, it suggests a redistribution of care toward wealthier Americans.

Researchers led by Samuel L. Dickman, MD, of Harvard Medical School, set out to explore whether the health spending slowdown between 2004 and 2013 affected all income groups equally given that many Americans faced rising copayments and deductibles during this period. The study appears in the July 2016 issue of Health Affairs.

The researchers divided the US population into income quintiles and assessed trends in health expenditures by and for people in each quintile using 22 national surveys carried out between 1963 and 2012. They noted that prior to the 1965 passage of laws creating Medicare and Medicaid, the lowest income quintile had the lowest expenditures despite their worse health compared with other income groups. But by 1977 the unadjusted expenditures for the lowest quintile exceeded those for all other income groups, a pattern that remained until 2004.

After 2004, expenditures for the lowest quintile fell, while rising more than 10% for the middle three quintiles and close to 20% for the highest-income quintile (which had the highest expenditures in 2012). Because the post-2004 change in expenditure patterns for the wealthy, middle class, and poor was seen only among the nonelderly population, the authors concluded that the new pattern of healthcare spending (in which the wealthiest quintile has the highest spending) suggests that a redistribution of care toward wealthier Americans accompanied the slowdown in healthcare spending.

Unlike other goods and services, need plays a greater role in determining consumption of medical care. Health insurance has also insulated most patients from the cost of their care, and Medicaid and Medicare have heavily subsidized care for the poor and elderly, who usually have the greatest health needs.

“However, recent increases in copayments and deductibles for the privately insured, along with flat income growth, may have constrained health spending overall and skewed it toward wealthier Americans,” the authors wrote. A typical individual silver-tier plan sold through the insurance exchanges carries a $2907 deductible.

The slowdown in health spending between 2004 and 2013 was celebrated, but the authors say that the new data suggest a more sobering interpretation: that slower spending growth was concentrated among poor and middle-income Americans, leading to an increasing disparity in health spending across income groups.

“We fear that it might presage deepening disparities in health outcomes,” they cautioned.

The pattern of sharply rising spending for the wealthy and slow growth for others mirrors the widening gap in the consumption of other goods, the authors noted, and could represent a shift from need-based to income-based use of medical care.

“The rising income-based disparity in spending suggests a shift from allocation of health care according to need to allocation by willingness (and ability) to pay,” they concluded.