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

J Gen Intern Med Impact of Out-of-Pocket Spending Caps on Financial Burden of those with Group Health Insurance Kevin R. Riggs 0 1 2 Christine Buttorff 4 G. Caleb Alexander 0 Center for Drug Safety and Effectiveness, Johns Hopkins University , Baltimore, MD , USA 1 Johns Hopkins Berman Institute of Bioethics , Baltimore, MD , USA 2 Division of General Internal Medicine, Johns Hopkins University School of Medicine , Baltimore, MD , USA 3 Department of Epidemiology, Johns Hopkins Bloomberg School of Public Health , Baltimore, MD , USA 4 RAND Corporation , Arlington, VA , USA BACKGROUND: The Affordable Care Act (ACA) mandates that all private health insurance include outof-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 outof-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 incomebased 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. health insurance; health reform; health care costs - The Affordable Care Act (ACA) includes numerous provisions aimed at improving the financial protection offered by health insurance and reducing financial burden caused by high health care costs. In addition to prohibiting life-time benefit caps, prohibiting exclusion of pre-existing conditions, and mandating coverage for certain services such as preventive screenings, the ACA also seeks to directly reduce financial burden by capping individuals’ and families’ annual out-of-pocket payments, which include deductibles, co-insurance and copayments. One reason these caps are of interest is that being “underinsured”—having insurance and yet being exposed to a high level of financial risk1—and the associated financial burden contribute to numerous adverse consequences, such as non-compliance,2 delayed or forgone care,3 and bankruptcy.4 The recent health care reform was largely motivated by the “crisis” of high uninsurance,5 and much of the attention generated by the ACA has focused on the new Health Insurance Marketplace (“exchanges”) and the eight million Americans who signed up during the initial open enrollment.6 However, reform was also motivated to improve insurance and lower costs for all Americans, and since the majority of non-elderly Americans will remain covered by insurance obtained through their employers, provisions in the ACA that affect group (i.e., employer-sponsored) insurance have the potential to impact the financial burden of many more individuals than the exchanges. Out-of-pocket spending caps are one important measure that improves the financial protection of health insurance, although the caps offer different protection to those on the exchanges and those with group insurance. Those who purchase insurance through the exchanges are eligible for income-based out-of-pocket caps (“income-based caps”), while those with group insurance are not (“uniform caps”)—the ACA mandates that non-grandfathered group insurance plans (plans are considered grandfathered if they have not made significant changes to benefit structure after 2010) have out-of-pocket caps, but those caps can be as high as those set for Health Savings Account-qualified plans (highdeductible health plans).7 The effect of out-of-pocket caps on reducing financial burden is largely unknown, even though the majority of employer-sponsored plans had an individual out-of- (...truncated)