Accounting for the Burden and Redistribution of Health Care Costs

Objective

To measure the burden of financing health care costs and quantify redistribution among population groups.

Data Sources

A synthetic population using data combined from multiple sources, including the Survey of Income and Program Participation (SIPP), Medical Expenditure Panel Survey (MEPS), Kaiser Family Foundation (KFF)/Health Research Educational Trust (HRET) Employer Health Benefits Survey, American Community Survey (ACS), and National Health Expenditure Accounts (NHEA).

Study Design

We estimate two dollar amounts for each individual in the synthetic population: (a) payments to finance health care services, which includes all payments by a household and their employers to finance health care, including premiums, out-of-pocket payments, federal and state taxes, and other payments; and (b) the dollar value of health care services received, which equals the amount paid to providers for those services.

Data Extraction Methods

We linked the nationally representative survey data using statistical matching. We allocated health care expenditures from the NHEA to individuals and households based on expenditures reported in the MEPS.

Principal Findings

We show that higher-income households pay the most to finance health care in dollar amounts, but the burden of payments as a share of income is greater among lower-income households.

Conclusions

Accounting for all sources of payments provides a clear picture of the burden of financing health care costs, and how that burden is spread under our current financing system.