An analysis of who is most at risk for high out-of-pocket health spending

As deductibles in health insurance plans have grown, there is concern about the level of out-of-pocket health costs faced by workers and their families with health insurance. In this brief, we present new analysis of the share of people with employer-sponsored health insurance facing high out-of-pocket costs, and how that varies by gender, age, and disease.

The percentage of high out-of-pocket spenders has increased over time

While the majority – over 60% – of insurance enrollees had less than $500 in out-of-pocket expenses in 2015, nearly a quarter spent $1,000 or more on health care services and more than 1 in 10 workers spent over $2,000. This represents a growing fraction of patients over the last decade, with the share spending $1,000 or more rising from 17% to 24%. This out-of-pocket spending distribution is similar to that seen in total medical spending where many household have medical spending less than $270 on healthcare, while the top 5% have spending averaging around $47,000 annually.

In 2015, 12% of private insurance enrollees had out-of-pocket spending greater than $2,000

There are significant differences in out-of-pocket expense across diseases. Diseases of the blood, congenital anomalies, digestive disease, cancers, and circulatory system diseases are the top five categories (followed closely by mental health in the sixth). People being treated for all of these conditions have average annual out-of-pocket costs over $1,500 annually, with blood diseases averaging close to $2,000.

Out of pocket spending is highest for those with diseases of blood organs

Cancer is the second leading cause of mortality and disease burden in the US. For people undergoing treatment for cancer, out-of-pocket expenses are nearly double that of the average enrollee ($1,510 compared to $778). Additionally, out-of-pocket costs for treatment for many common forms of cancer – such as colorectal, breast, and urinary cancers – are well above the average for cancer patients.  

A higher than average share of enrollees with cancer diagnoses had out-of-pocket spending over $5,000

Suicide treatment patients have higher out-of-pocket costs than other mental health patients

Out-of-pocket expenses associated with undergoing treatment for a suicide attempt, psychotic disorders, and dementia are the highest among mental health conditions. This cost burden is concerning given that mental health is the top category for disease burden in the US, affecting nearly a fifth of the total adult population. The likelihood that an enrollee with mental health spending will have out-of-pocket costs over $5,000 is double that of the average worker

Conclusion

As the trend of patients with employer plans paying more in out-of-pocket continues, workers and their families feel the burden health care costs even as the growth of health spending in general remains moderate. This is occurring at a time when wages have been largely stagnant, and even seemingly modest out-of-pocket expenses can be difficult for people with little in savings.

Not surprisingly, people undergoing treatment for expensive illnesses face higher out-of-pocket costs, as do women and those who are older.

Still, the protective effects of insurance are powerful, and generally prevent people with coverage from facing catastrophic health expenses. However, there are situations – not captured in the data we analyzed – where people in treatment can face much higher expenses for “surprise medical bills,” where a particular service is not covered or an out-of-network provider charges substantially more than the insurer pays. 

Methods

We analyzed a sample of claims obtained from the Truven Health Analytics MarketScan Commercial Claims and Encounters Database. The database has claims information provided by large employers and health plans.  We used a subset of claims from the years 2004 through 2015. The analysis for each is limited to claims for enrollees with more than six months of enrollment in that year. We excluded claims paid on a capitated basis. With these limitations, the number of enrollees in the sample varied from about 785,000 in 2004 to over 14.8 million in 2015.

The MarketScan claims database contains information about health benefit claims and encounters for several million individuals each year provided by large employers.  The advantage of using claims information to look at out-of-pocket spending is that we can look beyond the plan provisions and focus on actual payment liabilities incurred by enrollees. A limitation of these data is that they reflect cost sharing incurred under the benefit plan and do not include balance-billing payments that beneficiaries may make to health care providers for out-of-network services or out-of-pocket payments for non-covered services.