Are Women Affected Most By Out Of Pocket Health Coverage

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According to a new report out Tuesday, low-income Americans, older people and women pay a greater share of their incomes towards out-of-pocket health costs compared to other Americans. The report also showed that there is a strong correlation between when Americans typically pay their out-of-pocket health costs and the months of March and April, which is when most people their income tax refunds.

The report, from the JP Morgan Chase Institute, discovered that out-of-pocket health spending was highly concentrated among relatively few families. The report stated, “The top 10 percent of health-care spenders contributed 49 percent of the total out-of-pocket spending in 2016.” This means that the top 10 percent on average spent 9 percent of their take-home pay on out-of-pocket health costs.These out-of-pocket costs are any health expenses not covered by an insurance plan. These costs include charges such as co-payments, deductibles, and coinsurance.

Diana Farrell, president and CEO of Jp Morgan Chase Institute stated, “The reality is that many American families don’t have the cash buffer to withstand the volatility created by out-of-pocket health-care payments, we need to better understand the correlation between financial health and physical health.” This report comes at the same time as Republican leaders in the Senate are rallying for a last-ditch bill to repeal and replace ObamaCare.

Experts predict that the Crahm-Cassidy bill could greatly weaken or even eliminate ACA rules that mandate health nsurance plans to cover a minimum set of so-called health benefits, without imposing out-of-pocket charges on patients.The report studied spending from 2013 through 2016, the first three full years of ObamaCare. When it was enacted, critics of the law predicted that Obamacare would lead to increased health costs. However the overall out-of-pocket health spending ended up being less of a share of take-home income over time.

Average annual out-of-pocket health-care spending by a family stood at $629, representing 1.7 percent of take-home pay. This number grew to $645 in 2014 and $690 in 2015. A rise of 6.9 percent. From 2014 through 2016, the total spent on out-of-pocket costs on average in those years was 1.6 percent of the average family’s household take-home pay. This was slightly less than the level seen in 2013.
Interestly, the burden on certain groups of people was much higher. For example, families that earned less than $24,000 annually spent, on average, 2.8 percent of their take-home pay on out-of-pocket costs in 2016. That number was up from 2.6 percent of the take-home pay in 2015.

The report stated that the next highest average burden was among families earning between $24,000 and $38,000 annually, which paid 1.6 percent of their take-home pay to out-of-pocket costs. As incomes rose after that, the burden of out-of-pocket costs dropped.For households where the primary checking account was held by a woman, families paid 1.8 percent of their take-home pay toward out-of-pocket health costs in 2016.

That statistic compares to 1.5 percent among families where men were the primary checking account holders. The report also uncovered that out-of-pocket cost burden increased in direct correlation to a person’s age. Americans 18 to 25 years old paid just 1.2 percent of their income towards out-of-pocket costs in 2016. That number rose to 1.6 percent for people 35 to 44 years old.

Farrell, CEO of JPMorgan Chase Institute, explained that while the overall average burden from out-of-pocket costs remained stable in the past four years, people are feeling more stress from those costs.
Farrell stated, “What we hear all the time.. is that these costs are increasing quite significantly, and we note that, too, But why is the burden stable? … By and large people are spending a certain fraction of their income on out-of-pocket health care spend, and then they won’t spend anymore. That means if they get the health care — fine. If that means they won’t pay for something that they’re due to pay, they’re probably not doing it, because we see this tight linkage between ability to pay, and pay,” Farrell said.

“It’s almost as though people cap how much they will spend on health care… so when they have more ability to pay, when incomes go up, they pay. When they don’t, they won’t get the health care or they won’t pay for the health care.”

Farrell concluded by stating that if the Grahm-Cassidy bill takes over Obamacare, it will increase the burden on low-income people who already are struggling with out-of-pocket health costs.

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