Financial Burden of Private Healthcare Increased Over the Past Two Decades

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Private healthcare is becoming more expensive for the nearly 180 million American families covered, according to the results of a study published yesterday in a JAMA Internal Medicine research letter.

A cross-sectional study led by Sukruth A. Shashikumar, M.D., a clinical fellow in medicine at Brigham and Women’s Hospital in Boston and Rishi K. Wadhera, M.D., M.P.P., M.Phil., of Beth Israel Deaconess Medical Center and Harvard Medical School in Boston, looked at Medicare Expenditure Panel Survey Data (MEPS) from 2007 to 2019 to gather healthcare cost information from 96,075 privately insured families. The total healthcare spending of a family was calculated using families’ contributions to premiums plus out-of-pocket medical and prescription drug spending. The annual financial medical burden was found by dividing total healthcare spending by family income minus their estimated food costs.

"If we had also accounted for other basic needs when calculating post-subsistence income, such as housing and utilities, we would have found that an even higher percentage of families’ incomes are dedicated to health care costs," Wadera said in an email interview.

Low-income families were classified as having an income of less than 200% of the federal poverty line for a family of four. In 2019, the federal poverty line for a family of four was $25,750, according to the U.S. Department of Health and Human Services, meaning that a family of four must make below $51,500 a year to qualify as low-income.

Researchers found that low-income families’ medical burden increased from 23.5% in 2007 to 26.4% in 2019 with a total spending increase from $3,920 in 2007 to $4,907 in 2019.

Higher-income families’ burden increased from 5.4% in 2007 to 6.5% in 2019 with a total spending increase from $4,071 in 2007 to $5,239 in 2019.

These increases may be from increased drug costs, aging enrollees and insurers' interest in profitability, the authors say in the study.

“Although medical burden increased across all populations, it is most worrisome for low-income families,” Shashikumar and Wadhera write. “Low-income families are disproportionately affected by debt and are more susceptible to adverse health outcomes.”

Shashikumar and Wadhera suggest that policymakers should strengthen income-based subsidies and bolster antitrust laws to combat this.

"Our findings highlight the critical need to develop policy strategies to financially protect low-income families with private health insurance - our finding that >25% of these families' income goes towards healthcare costs is very concerning," Wadera concluded.