THE NATIONAL ACADEMIES PRESS Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Medical Care Economic Risk Measuring Financial Vulnerability from Spending on Medical Care Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure Michael J O’Grady and Gooloo S Wunderlich, Editors Committee on National Statistics Division of Behavioral and Social Sciences and Education and Board on Health Care Services Institute of Medicine Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance This study was supported by Contract/Grant No HHSP23320042509XI, TO#39 between the National Academy of Sciences and the U.S Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation Support for the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (award number SES-1024012) Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and not necessarily reflect the views of the organizations or agencies that provided support for the project International Standard Book Number 978-0-309-26604-8 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu Copyright 2012 by the National Academy of Sciences All rights reserved Printed in the United States of America Suggested citation: National Research Council and Institute of Medicine (2012) Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure, M.J O’Grady and G.S Wunderlich, Eds Committee on National Statistics, Division of Behavioral and Social Sciences and Education, and Board on Health Care Services, Institute of Medicine Washington, DC: The National Academies Press ii Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters Dr Ralph J Cicerone is president of the National Academy of Sciences The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers Dr Charles M Vest is president of the National Academy of Engineering The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education Dr Harvey V Fineberg is president of the Institute of Medicine The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities The Council is administered jointly by both Academies and the Institute of Medicine Dr Ralph J Cicerone and Dr Charles M Vest are chair and vice chair, respectively, of the National Research Council www.national-academies.org iii Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs iv Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs PANEL ON MEASURING MEDICAL CARE RISK IN CONJUNCTION WITH THE NEW SUPPLEMENTAL INCOME POVERTY MEASURE MICHAEL J O’GRADY (Chair), President, West Health Policy Center DAVID M BETSON, Economics Department, University of Notre Dame JOHN L CZAJKA, Mathematica Policy Research, Inc., Washington, DC EDWIN C HUSTEAD, Actuary (retired), Alexandria, VA EMMETT B KEELER, Pardee RAND Graduate School, School of Public Health, University of California, Los Angeles WILLARD G MANNING, Harris School of Public Policy Studies, University of Chicago WILHELMINE D MILLER, NORC at the University of Chicago CATHY SCHOEN, The Commonwealth Fund, New York, NY P.J ERIC STALLARD, Social Science Research Institute, Duke University GOOLOO S WUNDERLICH, Study Director JACQUELINE R SOVDE, Program Associate JESSICA BANTHIN, Consultant v Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs COMMITTEE ON NATIONAL STATISTICS (2011-2012) LAWRENCE D BROWN (Chair), Department of Statistics, Wharton School, University of Pennsylvania JOHN M ABOWD, School of Industrial and Labor Relations, Cornell University ALICIA CARRIQUIRY, Department of Statistics, Iowa State University WILLIAM DUMOUCHEL, Oracle Health Sciences, Waltham, MA V JOSEPH HOTZ, Department of Economics, Duke University MICHAEL HOUT, Survey Research Center, University of California, Berkeley KAREN KAFADAR, Department of Statistics, Indiana University SALLIE KELLER, Provost, University of Waterloo, Ontario, Canada LISA LYNCH, Heller School for Social Policy Management, Brandeis University SALLY C MORTON, Biostatistics Department, Graduate School of Public Health, University of Pittsburgh JOSEPH NEWHOUSE, Division of Health Policy Research and Education, Harvard University RUTH PETERSON, Department of Sociology (emeritus) and Criminal Justice Research Center, Ohio State University HAL STERN, Donald Bren School of Information and Computer Sciences, University of California, Irvine JOHN THOMPSON, NORC at the University of Chicago ROGER TOURANGEAU, Westat, Rockville, MD ALAN ZASLAVSKY, Department of Health Care Policy, Harvard Medical School CONSTANCE F CITRO, Director vi Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs BOARD ON HEALTH CARE SERVICES STEVEN A SCHROEDER (Chair), Department of Medicine, University of California, San Francisco JOSEPH R BAKER, Medicare Rights Center, New York, NY ELISABETH BELMONT, Mainehealth, Portland, Maine ROBERT A BERENSON, The Urban Institute, Washington, DC LISA A BERO, School of Medicine, University of California, San Francisco DAVID BLUMENTHAL, Harvard Medical School and Mongan Institute for Health Policy, Massachusetts General Hospital STUART BUTLER, Center for Policy Innovation, Heritage Foundation JON B CHRISTIANSON, School of Public Health, University of Minnesota JACK EBELER, Health Policy Alternatives, Inc., Washington, DC ROBERT S GALVIN, Equity Healthcare and Corporate Private Equity, Blackstone Group, New York REBEKAH E GEE, Schools of Medicine and Public Health, Louisiana State University CARMEN R GREEN, Schools of Medicine and Public Health, University of Michigan Health System MAREASA R ISAACS, National Alliance of Multi-Ethnic Behavioral Health Associations, Silver Spring, Maryland BRENT C JAMES, Institute for Health Care Delivery Research, Intermountain Healthcare, Salt Lake City, UT CHARLES N KAHN, III, Federation of American Hospitals, Washington, DC ELIZABETH A McGLYNN, Kaiser Permanente Center for Effectiveness & Safety Research, Oakland, California CYNTHIA D MULROW, University of Texas Health Science Center, San Antonio MARY D NAYLOR, New Courtland Center for Transitions and Health and Interdisciplinary Nursing Quality Research Initiative, University of Pennsylvania ALAN WEIL, National Academy for State Health Policy, Washington, DC GAIL R WILENSKY, Project HOPE, Bethesda, MD ROGER HERDMAN, Board Director vii Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs viii Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs Acknowledgments The Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure acknowledges with appreciation the contributions of the many individuals who gave of their time and knowledge to this report Support for the study was provided by the Office of the Assistant Secretary for Planning and Evaluation, U.S Department of Health and Human Services Donald Oellerich, project officer for the study, was very helpful in providing relevant information and presenting at a workshop organized by the panel In addition, David S Johnson of the U.S Census Bureau provided invaluable insights into the Census Bureau’s work on the measurement of poverty and its relationship with medical care out-of-pocket expenditures We acknowledge with appreciation the many people who participated in a workshop convened by the panel and contributed to its success We thank all the presenters for their expert presentations and the participants for their stimulating and insightful comments and discussion A summary of the workshop is in Part II of the report We are grateful to Sarah Meier, Barbara Wolfe, John Czajka, Jessica Banthin, and Didem Bernard, the authors of commissioned papers prepared for the study These papers were used by panel and staff in drafting the report and are included in Part III of the report Members of the panel gave generously of their time and expert knowledge in the deliberations that produced this report Their timely and thoughtful work in drafting written reviews of various issues in the report is gratefully acknowledged Staff of the Committee on National Statistics (CNSTAT) and the Division of Behavioral and Social Sciences and Education (DBASSE) provided important support and assistance to the panel Gooloo S Wunderlich, study director, was responsible for organizing the workshop and the meetings of the panel, preparing the summary of the workshop presentations and discussions, getting the background papers commissioned, drafting large portions of the report based on the reviews prepared by the panel members, and responding to the many comments from the reviewers on behalf of the panel Jacqui Sovde provided administrative support We gratefully acknowledge the important role of Constance F Citro, director of CNSTAT, for providing guidance and support throughout the study and in the preparation of this report Christine McShane, DBASSE senior editor, provided editing advice, and Alisa Decatur provided advice on references Yvonne Wise, DBASSE production editor, processed the report through the final production, and Kirsten Sampson-Snyder, DBASSE senior report review officer, efficiently shepherded the report through the report review process This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the Report Review Committee of the National Research Council The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process We thank the following individuals for their review of this report: Greg J Duncan, Department of Education, University of California, Irvine; Jonathan H Gruber, Department of ix Copyright © National Academy of Sciences All rights reserved Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care Prepublication Copy Uncorrected Proofs TABLE CP2-3 Alternative Income Measures and Percentage with High Burdens (5% asset added to elderly) for Elderly and Nonelderly Health Insurance Eligibility Units, Pooled Panels 10-12 N TOTINC ADJINC BURD10 BURD20 BURD10ADJ BURD20ADJ Overall 3,970 41,592 57,644 52.53 26.06 40.01 16.54 Elderly (992) 91,417) (0.94) (0.90) (0.98) (0.72) 17,513 53,751 53,751 17.02 7.68 17.02 7.68 Nonelderly (682) (682) (0.36) (0.27) (0.36) (0.27)