Impact of Out-of-Pocket Spending Caps on Financial Burden of Those with Group Health Insurance

Published in: Journal of General Internal Medicine, v. 30, no. 5, May 2015, p. 683-688

Posted on RAND.org on March 09, 2015

by Kevin R. Riggs, Christine Buttorff, G. Caleb Alexander

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BACKGROUND: The Affordable Care Act (ACA) mandates that all private health insurance include out-of-pocket spending caps. Insurance purchased through the ACA's Health Insurance Marketplace may qualify for income-based caps, whereas group insurance will not have income-based caps. Little is known about how out-of-pocket caps impact individuals' health care financial burden. OBJECTIVE: We aimed to estimate what proportion of non-elderly individuals with group insurance will benefit from out-of-pocket caps, and the effect that various cap levels would have on their financial burden. DESIGN: We applied the expected uniform spending caps, hypothetical reduced uniform spending caps (reduced by one-third), and hypothetical income-based spending caps (similar to the caps on Health Insurance Marketplace plans) to nationally representative data from the Medical Expenditure Panel Survey (MEPS). PARTICIPANTS: Participants were non-elderly individuals (aged < 65 years) with private group health insurance in the 2011 and 2012 MEPS surveys (n =26,666). MAIN MEASURES: (1) The percentage of individuals with reduced family out-of-pocket spending as a result of the various caps; and (2) the percentage of individuals experiencing health care services financial burden (family out-of-pocket spending on health care, not including premiums, greater than 10 % of total family income) under each scenario. KEY RESULTS: With the uniform caps, 1.2 % of individuals had lower out-of-pocket spending, compared with 3.8 % with reduced uniform caps and 2.1 % with income-based caps. Uniform caps led to a small reduction in percentage of individuals experiencing financial burden (from 3.3 % to 3.1 %), with a modestly larger reduction as a result of reduced uniform caps (2.9 %) and income-based caps (2.8 %). CONCLUSIONS: Mandated uniform out-of-pocket caps for those with group insurance will benefit very few individuals, and will not result in substantial reductions in financial burden.

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