Larger Share of People Had High Medical Cost Burdens Prior to ACA

The percentage of people with high medical costs increased from 2007-2009 to 2011, but the Affordable Care Act’s coverage provisions should substantially reduce cost burdens for many people, according to a Commonwealth Fund study published in Health Affairs.

Author Peter J. Cunningham, PhD, analyzed data from the 2001-2011 Medical Expenditure Panel Surveys and found that 19.2% of Americans spent more than 10% of their family income on out-of-pocket healthcare expenses in 2011, which is up from 18.2% during 2007-2009 and 15.7% during 2001-2003.

“Growth in national health care spending has slowed in recent years, which many observers attribute to the lingering effects of the recession of 2007-09 and continued high unemployment,” he wrote. “However, the percentage of Americans with high out-of-pocket burdens continues to increase.”

The increased cost burden was primarily driven by a 33% increase in spending on premiums (after inflation). In 2011, families were spending an average of $2069 per year on premiums out of pocket, compared with just $1589 in 2001-2003.

Medical cost burdens were particularly high for people with private nongroup insurance with family spending on premiums averaging $5799 in 2011. According to the study, 53% of people with nongroup coverage in 2009-2011 had family incomes of 400% of poverty or less, which makes them potentially eligible for subsidies in the Marketplace.

People in families with incomes that were 138-250% of poverty in 2009-2011 spent an average of $5435, or 15.9% of their income, in annual premiums. According to Dr Cunningham, if these same people purchased subsidized coverage with the second-lowest-cost silver plan in the Marketplace, their out-of-pocket premiums would only be 5% of family income, or just $1797 on average.

“Those who purchased nongroup coverage before the implementation of the health insurance Marketplaces in 2014 spent an especially high proportion of their income on health care, and over half of these people will qualify for premium subsidies in the Marketplaces,” Dr Cunningham wrote. “Federal subsidies will substantially reduce medical cost burdens for many people who do not obtain health insurance through their employers.”