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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

MEDICAL CARE ECONOMIC RISK

Measuring Financial Vulnerability
from Spending on Medical Care

Panel on Measuring Medical Care Risk in Conjunction with
the New Supplemental Income Poverty Measure

Michael J. O’Grady and Gooloo S. Wunderlich, Editors

Committee on National Statistics
Division of Behavioral and Social Sciences and Education
and
Board on Health Care Services
Institute of Medicine

NATIONAL RESEARCH COUNCIL AND
                  INSTITUTE OF MEDICINE
                          OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.

www.nap.edu

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

THE NATIONAL ACADEMIES PRESS     500 Fifth Street, NW     Washington, DC 20001

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.

This study was supported by Contract/Grant No. HHSP23320042509XI, TO#39 between the National Academy of Sciences and the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation. Support for the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (award number SES-1024012). Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.

International Standard Book Number-13: 978-0-309-26604-8
International Standard Book Number-10: 0-309-26604-1

Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu.

Copyright 2012 by the National Academy of Sciences. All rights reserved.

Printed in the United States of America

Suggested citation: National Research Council and Institute of Medicine. (2012). Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure, M.J. O’Grady and G.S. Wunderlich, Eds. Committee on National Statistics, Division of Behavioral and Social Sciences and Education, and Board on Health Care Services, Institute of Medicine. Washington, DC: The National Academies Press.

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

THE NATIONAL ACADEMIES

Advisers to the Nation on Science, Engineering, and Medicine

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.

The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering.

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine.

The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council.

 

www.national-academies.org

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

PANEL ON MEASURING MEDICAL CARE RISK IN CONJUNCTION WITH THE NEW SUPPLEMENTAL INCOME POVERTY MEASURE

MICHAEL J. O’GRADY (Chair), President, West Health Policy Center

DAVID M. BETSON, Department of Economics, University of Notre Dame

JOHN L. CZAJKA, Mathematica Policy Research, Inc., Washington, DC

EDWIN C. HUSTEAD, Actuary (retired), Alexandria, VA

EMMETT B. KEELER, Pardee RAND Graduate School, School of Public Health, University of California, Los Angeles

WILLARD G. MANNING, Harris School of Public Policy Studies, University of Chicago

WILHELMINE D. MILLER, NORC at the University of Chicago

CATHY SCHOEN, The Commonwealth Fund, New York, NY

P.J. ERIC STALLARD, Social Science Research Institute, Duke University

GOOLOO S. WUNDERLICH, Study Director

JACQUELINE R. SOVDE, Program Associate

JESSICA BANTHIN, Consultant

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

COMMITTEE ON NATIONAL STATISTICS 2011-2012

LAWRENCE D. BROWN (Chair), Department of Statistics, Wharton School, University of Pennsylvania

JOHN M. ABOWD, School of Industrial and Labor Relations, Cornell University

ALICIA CARRIQUIRY, Department of Statistics, Iowa State University

WILLIAM DUMOUCHEL, Oracle Health Sciences, Waltham, MA

V. JOSEPH HOTZ, Department of Economics, Duke University

MICHAEL HOUT, Survey Research Center, University of California, Berkeley

KAREN KAFADAR, Department of Statistics, Indiana University

SALLIE KELLER, Provost, University of Waterloo, Ontario, Canada

LISA LYNCH, Heller School for Social Policy Management, Brandeis University

SALLY C. MORTON, Biostatistics Department, Graduate School of Public Health, University of Pittsburgh

JOSEPH NEWHOUSE, Division of Health Policy Research and Education, Harvard University

RUTH PETERSON, Department of Sociology (emeritus) and Criminal Justice Research Center, Ohio State University

HAL STERN, Donald Bren School of Information and Computer Sciences, University of California, Irvine

JOHN THOMPSON, NORC at the University of Chicago

ROGER TOURANGEAU, Westat, Rockville, MD

ALAN ZASLAVSKY, Department of Health Care Policy, Harvard Medical School

CONSTANCE F. CITRO, Director

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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

BOARD ON HEALTH CARE SERVICES

STEVEN A. SCHROEDER (Chair), Department of Medicine, University of California, San Francisco

JOSEPH R. BAKER, Medicare Rights Center, New York

ELISABETH BELMONT, Mainehealth, Portland, ME

ROBERT A. BERENSON, The Urban Institute, Washington, DC

LISA A. BERO, School of Medicine, University of California, San Francisco

DAVID BLUMENTHAL, Harvard Medical School and Mongan Institute for Health Policy, Massachusetts General Hospital

STUART BUTLER, Center for Policy Innovation, Heritage Foundation

JON B. CHRISTIANSON, School of Public Health, University of Minnesota

JACK EBELER, Health Policy Alternatives, Inc., Washington, DC

ROBERT S. GALVIN, Equity Healthcare and Corporate Private Equity, Blackstone Group, New York

REBEKAH E. GEE, Schools of Medicine and Public Health, Louisiana State University

CARMEN R. GREEN, Schools of Medicine and Public Health, University of Michigan Health System

MAREASA R. ISAACS, National Alliance of Multi-Ethnic Behavioral Health Associations, Silver Spring, MD

DBRENT C. JAMES, Institute for Health Care Delivery Research, Intermountain Healthcare, Salt Lake City, UT

CHARLES N. KAHN, III, Federation of American Hospitals, Washington, DC

ELIZABETH A. McGLYNN, Kaiser Permanente Center for Effectiveness and Safety Research, Oakland, CA

CYNTHIA D. MULROW, University of Texas Health Science Center, San Antonio

MARY D. NAYLOR, New Courtland Center for Transitions and Health and Interdisciplinary Nursing Quality Research Initiative, University of Pennsylvania

ALAN WEIL, National Academy for State Health Policy, Washington, DC

GAIL R. WILENSKY, Project HOPE, Bethesda, MD

ROGER HERDMAN, Board Director

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

Acknowledgments

The Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure acknowledges with appreciation the contributions of the many individuals who gave of their time and knowledge to this report.

Support for the study was provided by the Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. Donald Oellerich, project officer for the study, was very helpful in providing relevant information and presenting at a workshop organized by the panel. In addition, David S. Johnson of the U.S. Census Bureau provided invaluable insights into the Census Bureau’s work on the measurement of poverty and its relationship with medical care out-of-pocket expenditures.

We acknowledge with appreciation the many people who participated in a workshop convened by the panel and contributed to its success. We thank all the presenters for their expert presentations and the participants for their stimulating and insightful comments and discussion. A summary of the workshop is in Part II of the report.

We are grateful to Jessica Banthin, Didem Bernard, John Czajka, Sarah Meier, and Barbara Wolfe, the authors of commissioned papers prepared for the study. These papers were used by panel and staff in drafting the report and are included in Part III of the report.

Members of the panel gave generously of their time and expert knowledge in the deliberations that produced this report. Their timely and thoughtful work in drafting written reviews of various issues in the report is gratefully acknowledged.

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

Staff of the Committee on National Statistics (CNSTAT) and the Division of Behavioral and Social Sciences and Education (DBASSE) provided important support and assistance to the panel. Gooloo S. Wunderlich, study director, was responsible for organizing the workshop and the meetings of the panel, preparing the summary of the workshop presentations and discussions, getting the background papers commissioned, drafting large portions of the report based on the reviews prepared by the panel members, and responding to the many comments from the reviewers on behalf of the panel. Jacqui Sovde provided administrative support. We gratefully acknowledge the important role of Constance F. Citro, director of CNSTAT, for providing guidance and support throughout the study and in the preparation of this report. Christine McShane, DBASSE senior editor, provided editing advice, and Alisa Decatur provided advice on references. Yvonne Wise, DBASSE production editor, processed the report through the final production, and Kirsten Sampson-Snyder, DBASSE senior report review officer, efficiently shepherded the report through the report review process.

This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the Report Review Committee of the National Research Council (NRC). The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.

We thank the following individuals for their review of this report: Greg J. Duncan, Department of Education, University of California, Irvine; Jonathan H. Gruber, Department of Economics, Massachusetts Institute of Technology; Gerald F. Kominsky, Department of Health Services, University of California, Los Angeles, Fielding School of Public Health; Charles E. Phelps, University Professor and Provost Emeritus, University of Rochester; Timothy M. Smeeding, Institute for Research on Poverty, Robert M. LaFollette School of Public Affairs, University of Wisconsin–Madison; Laura Wheaton, Income and Benefits Policy Center, The Urban Institute; Gary J. Young, Center for Health Policy and Health Care Research, Northeastern University; Alan M. Zaslavsky, Department of Health Care Policy, Harvard Medical School; and Julie Zissimopoulos, Department of Clinical Pharmacy and Pharmaceutical Economics and Policy, University of Southern California.

Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the content of the report nor did they see the final draft of the report before its release. The review of this report was overseen by Melvin Worth, senior Institute

Page xiii Cite
Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

of Medicine fellow (retired), Sun City Center, Florida (coordinator), and Jonathan S. Skinner, Economics Department and the Dartmouth Institute for Health Policy and Clinical Practice, Dartmouth College (monitor). Appointed by the NRC, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring panel and the institution.

Michael J. O’Grady, Chair
Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure

Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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Suggested Citation:"Front Matter." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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The United States has seen major advances in medical care during the past decades, but access to care at an affordable cost is not universal. Many Americans lack health care insurance of any kind, and many others with insurance are nonetheless exposed to financial risk because of high premiums, deductibles, co-pays, limits on insurance payments, and uncovered services. One might expect that the U.S. poverty measure would capture these financial effects and trends in them over time. Yet the current official poverty measure developed in the early 1960s does not take into account significant increases and variations in medical care costs, insurance coverage, out-of-pocket spending, and the financial burden imposed on families and individuals. Although medical costs consume a growing share of family and national income and studies regularly document high rates of medical financial stress and debt, the current poverty measure does not capture the consequences for families' economic security or their income available for other basic needs.

In 1995, a panel of the National Research Council (NRC) recommended a new poverty measure, which compares families' disposable income to poverty thresholds based on current spending for food, clothing, shelter, utilities, and a little more. The panel's recommendations stimulated extensive collaborative research involving several government agencies on experimental poverty measures that led to a new research Supplemental Poverty Measure (SPM), which the U.S. Census Bureau first published in November 2011 and will update annually. Analyses of the effects of including and excluding certain factors from the new SPM showed that, were it not for the cost that families incurred for premiums and other medical expenses not covered by health insurance, 10 million fewer people would have been poor according to the SPM.

The implementation of the patient Protection and Affordable Care Act (ACA) provides a strong impetus to think rigorously about ways to measure medical care economic burden and risk, which is the basis for Medical Care Economic Risk. As new policies - whether part of the ACA or other policies - are implemented that seek to expand and improve health insurance coverage and to protect against the high costs of medical care relative to income, such measures will be important to assess the effects of policy changes in both the short and long term on the extent of financial burden and risk for the population, which are explained in this report.

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