3.4 Out of pocket payments
OOP payments are health-care related costs paid by consumers. They include direct payment for health services, coinsurance, co-payments and deductibles. While OOP payments have fallen as a percentage of the total, real OOP spending has actually risen considerably. This is because the size of the health-care system has grown so fast. In 1970, per capita OOP spending was $128 of the $319 spent on personal health care per capita, representing a 40% share (Table3.12). By 2011, United States health-care consumers spent $1146 in OOP payments of the $8187 spent per capita on personal health expenditures, or 14%. In contrast, the consumer price index over this same period grew by only 5.8-fold. In the midst of this general upward trend in recent decades in OOP payments among OECD countries, the United States has historically ranked second highest in per capita OOP spending, after Switzerland (OECD, 2012a).
The growth rate in OOP payments was not distributed equally across subgroups of the United States population and the services they use. The largest increases in OOP spending between 1995 and 2006 were experienced by those with non-Medicaid public insurance (60%), the uninsured (46%) and individuals at or below the poverty line (35%), compared to those with private coverage (15%) (Paez, Zhao & Hwang, 2009).
Americans between 65 and 79 years of age had the highest per capita OOP payments in 2005 ($575) compared to any other age group. Also, women spent more out of pocket ($389) relative to men ($291) and Non-Hispanic Whites spent more on OOP payments ($368) than other race / ethnicity groups. Among those under the age of 65, the uninsured’s expenditures on OOP payments were higher ($536) than those with private ($362), Medicaid ($97), or other public insurance ($367) (Paez, Zhao & Hwang, 2009).
With respect to health status, OOP payments increased with the number of chronic diseases for all types of health care. The biggest absolute differences in amount of OOP spending by number of chronic conditions occurred for prescription drugs. Individuals of 65 and older with three or more chronic diseases paid $1292 on average per year compared with $173 for people of the same age without any chronic conditions. For younger adults, this difference was more than 20-fold ($951 versus $45). Comparatively, persons over the age of 65 without any chronic conditions paid $6 per capita on hospital inpatient services and $18 on outpatient and ED services, whereas those with three or more chronic conditions paid $56 and $49 respectively (Paez, Zhao & Hwang, 2009). In 2006, median OOP spending for Medicare beneficiaries as a percentage of median income was highest for those in poor health (22%), while those in excellent or very good health earned more and spent less on OOP payments. With respect to chronic diseases, Medicare recipients with Alzheimer’s disease spent 26% of their income on OOP expenditures, those with congestive heart failure 25%, and Medicare beneficiaries with cancer spent 23% of their income on OOP expenses (AARP, 2011). In part as a result of rising OOP payments among some of the most vulnerable in the United States, nearly half of all United States families filing bankruptcy in 2001 cited medical debt as a cause (Himmelstein et al., 2005).