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1 Introduction
Pages 15-26

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From page 15...
... panel, which in 1995 issued a report, Measuring Poverty: A New Approach, that led to extensive research, culminating in the new measure as a supplement to the outdated official poverty measure. The NRC panel also recommended a separate measure of the economic risk to families because of inadequate health insurance coverage for needed medical care.
From page 16...
... Most important for this report, the official poverty measure does not take account of the dramatic increases in medical care costs and spending since the measure was first adopted. At that time, national health care spending accounted for only 5 to 6 percent of gross domestic product compared with nearly 18 percent today.2 The rapid growth in medical care costs relative to income, particularly for middle- and low-income families, 1  This,and the next section, draws heavily on National Research Council (1995:Chapter 1)
From page 17...
... . Because the proposed revised poverty measure would not directly address the availability of affordable medical care, the panel further recommended that the federal government develop a separate measure of medical care risk that would estimate the economic risk to families and individuals lacking adequate health insurance coverage (National Research Council, 1995:69)
From page 18...
... The 1995 panel observed (National Research Council, 1995:223) : The issue of how best to treat medical care needs and resources in the poverty measure had bedeviled analysts since the mid-1970s, when rapid growth in the Medicare and Medicaid programs (and in private health 5  The ITWG included representatives from BLS, the Census Bureau, the Council of Economic Advisers, the Department of Commerce, the Department of Health and Human Services, and OMB.
From page 19...
... are not likely to free up money income to the same degree. Moreover, individual and small group insurance premiums tend to increase with age and illness because older or disabled populations on average have higher levels of health care spending due to poor health.6 At the same time, with any cost-sharing, older and sicker people will have higher out-of-pocket spending for medical care even if they have exactly the same insurance policy as younger, healthier people.
From page 20...
... , which is designed to significantly extend health insurance coverage in the United States and reduce the financial burden of premiums and other out-of-pocket expenditures for low- and middle-income families. Its passage underlines the potential usefulness of a measure of medical care economic risk that could monitor the effects of various ACA provisions, as well as changes in other medical care programs such as Medicare, on the economic well-being of the U.S.
From page 21...
... However, the SPM will not directly assess the extent to which population groups are likely to incur medical care needs that put them at financial risk. HHS would also find useful a companion measure of medical care economic risk, which estimates the proportion of families and children who are at risk of incurring high out-of-pocket medical care expenses, including health insurance premiums, in relation to their resources, for monitoring the effectiveness of health care reform.
From page 22...
... As expressed by the sponsor, much work has been done on a new income poverty measure, the Supplemental Poverty Measure, but the medical care economic risk measure is a separate measure and needs to move forward. In response to this request, the NRC's Committee on National Statistics, in collaboration with the IOM's Board on Health Care Services, appointed a panel of nine members representing a range of expertise related to the scope of the study.
From page 23...
... Within the constraints of time and available resources, the panel did not address every issue but covered those areas specifically called for in the contract charge. For example, we addressed medical care and not all aspects of health and health care; we addressed issues of financial risk of medical care and not all medical care risks; and we focused on survey data rather than on modeling issues.
From page 24...
... Regarding available survey data, the panel notes that the CPS ASEC, which is the basis for the official poverty measure and the SPM and the most feasible source for producing timely measures of medical care financial burden and risk, excludes institutionalized populations, most members of the armed forces, and the homeless. (This is true of most major federal household surveys.)
From page 25...
... Following this introduction, Chapter 2 describes the conceptual difference between medical care economic burden due to actual out-of-pocket medical expenses and medical care economic risk, discusses why both measures may be needed to inform national and state policies and assess trends, and outlines why it is important to keep the measures conceptually distinct. It also recommends an approach to measuring burden.


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