FAMILY SHARE OF HEALTH CARE EXPENDITURES: BASELINE DATA AND CONSUMER-DRIVEN HEALTH PLAN SCENARIOS
Suk-fong S. Tang.. Dept of Practice, American Academy of Pediatrics, Elk Grove Village, IL.

BACKGROUND: While working families increasingly enroll in high-deductible and consumer-driven health plans(HD/CDHPs), little is known about how much financial risk families assume by subscribing to such plans.

OBJECTIVE: Construct baseline(pre HD/CDHP) data of family out-of-pocket health care spending to facilitate understanding of how HD/CDHPs may impact financial risk borne by subscribing families.

DESIGN/METHODS: Using 1996-2002 MEPS, annual family health care expenditures and family share of payments were aggregated for each family with children where all members were insured full-year with employer-based and other private health insurance. Aggregated spending were then used to estimate baseline distribution of total family expenditures and out-of-pocket payments.

RESULTS: From 1996 to 2002, median per-family total expenditures is estimated at $4,085 annually in 2005 currency, with 20% of children living in families spending over $10K. Median family out-of-pocket payment is assessed at $871. With HD/CDHPs, the majority of families will pay more out-of-pocket (Fig. 3). Assuming unchanged levels of total family health expenditures and an annual $1K employer-contribution into Health Savings Accounts or Health Reimbursement Arrangements, for example, family contribution in CDHPs will exceed pre-CDHP levels in over 70% of families. Meanwhile, families in higher tax brackets will benefit from larger tax exemptions and experience lower net increase in out-of-pocket expense.

CONCLUSIONS: Pending conclusive evidence of health spending reduction achieved by consumer discretion, employers and families should be aware of and be prepared for higher out-of-pocket payments as they subscribe to HD/CDHPs. Policy makers should consider safeguard provisions when families find themselves under-insured, ie, unable to meet deductibles and co-insurance required by HD/CDHPs in order to access care.