Accounting for the burden and redistribution of health care costs: Who uses care and who pays for it

Abstract

Objective: To measure the burden of financing health care costs and quantify redistribution among population groups.

Data sources: A synthetic population using data combined from multiple sources, including the Survey of Income and Program Participation (SIPP), Medical Expenditure Panel Survey (MEPS), Kaiser Family Foundation (KFF)/Health Research Educational Trust (HRET) Employer Health Benefits Survey, American Community Survey (ACS), and National Health Expenditure Accounts (NHEA).

Study design: We estimate two dollar amounts for each individual in the synthetic population: (a) payments to finance health care services, which includes all payments by a household and their employers to finance health care, including premiums, out-of-pocket payments, federal and state taxes, and other payments; and (b) the dollar value of health care services received, which equals the amount paid to providers for those services.

Data extraction methods: We linked the nationally representative survey data using statistical matching. We allocated health care expenditures from the NHEA to individuals and households based on expenditures reported in the MEPS.

Principal findings: We show that higher-income households pay the most to finance health care in dollar amounts, but the burden of payments as a share of income is greater among lower-income households.

Conclusions: Accounting for all sources of payments provides a clear picture of the burden of financing health care costs, and how that burden is spread under our current financing system.

Keywords: health care costs; health care financing; health economics; redistribution.

Figure 1

Conceptual Framework of Health Care Payments and Health Care Received [Color figure can be viewed at http://wileyonlinelibrary.com] Note: Tax payments consist of the portions of federal and state income taxes, payroll taxes, and other taxes devoted to health care programs (health care programs include Medicare, Medicaid, TRICARE, Veterans’ health, Indian Health Services, workers’ compensation, maternal and child health programs, vocational rehabilitation programs, SAMHSA, public health activities, research, and structures and equipment). Premium payments include Medicare premiums, TRICARE premiums, premiums payments made by individuals for employer‐sponsored insurance and direct purchased insurance, and premium contributions by employers. Out‐of‐pocket payments are payments at the point of service. Other payments include contributions to retiree health insurance, workers’ compensation, worksite health care, school health programs, private investment, and other private spending on health care. The dollar value of health care received reflects all health care received regardless of the source of payment. Source: Authors’ depiction

Figure 2

Per Capita Payments to Finance Health Care and Dollar Value of Health Care Received, Overall and by Income Quintile, 2015 [Color figure can be viewed at http://wileyonlinelibrary.com] Note: The payments to finance health care are the sum of out‐of‐pocket, premium, tax, and other payments. The dollar value of health care received reflects national health expenditures, excluding other non‐durable medical products (non‐prescription drugs and medical sundries) and other private revenues (philanthropy and income from gift shops, cafeterias, parking lots, educational programs, and investment income for institutions such as hospitals, nursing homes, and home health agencies). Source: Authors’ analysis.