A recent study in Health Affairs by Tom Selden, Jenny Kenney, and colleagues looks at cost sharing in public plans and the financial burden it can have on low-income families. Even without cost sharing for children’s coverage, almost 13% of publicly insured children have a family financial burden of 10% of family income. Charging premiums and co-payments only increases the number of families facing a high burden, and hits lower-income families especially hard.
This raises an important point – when considering what is affordable in terms of cost sharing, the true unit of measure should be the family, as a child does not grow up in a universe of one. A 5% cap on out-of-pocket spending would have a dramatically different impact if all family health expenses were considered.
Additionally, health care spending is concentrated within a subset of the population (e.g., those with chronic conditions), as well as within the year. For example, a child may have his first asthma attack, necessitating a visit to the ER. Follow that up with a trip to his PCP and then a specialist, plus a few prescriptions and out-of-pocket costs can add up quickly!
This study finds that the month with the greatest spending accounted for 43% of all out-of-pocket spending. Even if this spending doesn’t amount to 5% of annual income, it can create a huge financial strain on the family and highlights the importance of measuring the burden of spending over shorter time periods.