Health Care Costs Have Risen Faster than Incomes

The study defined “high” as 10% or more of household income for all families and 5% or more of income for low-income families.

Factoring in premiums, 23% of US families (27 million) spent high levels of their total income on health care in 2002.

The report, Rising Out-of-Pocket Spending for Medical Care: A Growing Strain on Family Budgets, found that health care costs rose at a much higher rate than income in the period from 1996 to 2002.

Other findings of the study included:

• In 2001 – 02, an average of 13 million families per year-11% of all families-had direct out-of-pocket costs equal to or exceeding 10% of family income, compared with 8% in 1996-97.
• The share of families with high out-of-pocket costs is up sharply since 1996-97, increasing from 12% with spending above the combined income thresholds to 15% in 2001-02.
• Families with any member age 65 or older were much more likely than other families to have high medical care and premium costs relative to income. This is partly due to gaps in Medicare benefits, such as the lack of catastrophic coverage and, in the period covered by the study, almost no coverage of outpatient prescription drugs.
• The prevalence of high out-of-pocket costs is growing most rapidly among fully insured non-elderly families-those in which all members have coverage throughout the year. As of 2001-02, nearly 10 million people in such families had expenses that were high relative to income.

The full report can be downloaded from here .