By David Grande, MD, MPA, Frances K. Barg, PhD, Sarah Johnson, BA and Carolyn C. Cannuscio, ScD

Annals of Family Medicine, January/February 2013

ABSTRACT

PURPOSE Out-of-pocket cost sharing for health care expenses is a growing burden. Prior research has emphasized the medical consequences of cost sharing. This study investigates the range of social, medical, financial, and sometimes legal disruptions from high out-of-pocket health expenses.

METHODS We conducted open-ended, semistructured interviews with 33 insured patients (two-thirds covered by Medicare). All had chronic illnesses and sought philanthropic financial assistance.

RESULTS We found that high levels of cost sharing precipitated considerable anxiety and substantial debt problems, as well as disruptions of medical care. Participants described various borrowing strategies (eg, credit cards), legal problems (eg, debt collections), and threats to their nonmedical household budgets (eg, food, housing). Participants described explicit and rank-ordered strategies for coping with new medical expenses. Participants understood their health benefits with exceptional detail but described considerable anxiety about changes to those benefits that could easily disrupt carefully managed household budgets. Benefit designs that resulted in large variations in financial liability from month to month (eg, large deductibles or coverage gaps) imposed considerable financial challenges.

CONCLUSIONS As health care cost sharing grows, policy makers will need to consider the consequences of high cost sharing for families facing strained household budgets. Although the generosity of health insurance is important, continuity of benefits and month-to-month stability of financial liability are also important and may be undervalued in policy discussions.

And..

From the Results:

Four issues figured prominently. First, the structure of health insurance—especially gaps in coverage, such as the Medicare Part D “doughnut hole” — powerfully affected financial well-being. Second, financial stress and debt from medical expenditures had a strong influence on day-to-day personal, financial, and medical decision making. Third, participants turned to family and other sources to help manage the costs of their illnesses, which resulted in financial, emotional, and social challenges for all family members. Fourth, participants managed high out-of-pocket health care costs using a range of strategies that were potentially disruptive to their medical care.

http://annfammed.org/content/11/1/37.full.pdf+html

Comment:

By Don McCanne, M.D.

We have plenty of studies which demonstrate that out-of-pocket cost sharing for health care can expose patients to significant financial burdens and impair their access to care. This study provides a valuable addition to our knowledge base because it demonstrates just how disruptive these expanding innovations in cost sharing can be.

This study does not quantify the problem, nor was it intended to. Rather it provides us with a qualitative assessment of those who do face insurance-induced financial barriers to care, including, significantly, cost sharing in the Medicare program (part of the reason we want an improved Medicare).

Read the last paragraph in the excerpts above, under “From the Results.” These insurance innovations that supposedly are designed to make patients better shoppers of health care are causing severe financial stresses, unwise but unavoidable choices in forging health care, while fostering “financial, emotional, and social challenges for all family members.”

How well will the Affordable Care Act address these problems? First, the design of the essential health benefits required of the plans, although fairly broad, allows important benefits to be excluded as long as there is token representation of each general category of benefits. Also most exchange plans will penalize patients for obtaining care outside of their networks – again impairing affordability and access to important services that may be available only outside of the networks.

Probably the most significant disruptive element in the exchange plans is that most people will be enrolled in plans with either 60 or 70 percent actuarial value. Most of the plans will achieve these low actuarial values by requiring high deductibles and perhaps co-payments or coinsurance – some of the very tools that result in the disruptions described in today’s article. Although the Affordable Care Act does provide subsidies for both premiums and out-of-pocket expenses, for many individuals these subsidies will not be adequate to prevent the disruptions described.

Many nations with far lower total health care costs than ours are able to provide comprehensive health care for everyone – with first dollar coverage! They do not need to use disruptive out-of-pocket cost sharing to keep their level of spending sustainable. It is no secret how they do it. So why do our policy makers seem to want to keep it a secret here in the Unites States?