Financial and Health Burdens of Chronic Conditions Grow

Tracking Report No. 24
April 2009
Ha T. Tu, Genna R. Cohen

Close to 72 million working-age Americans -- those between 18 and 64 years old -- were living with chronic health conditions such as diabetes, asthma, or depression in 2007. Nearly three in 10, representing more than 20 million individuals with chronic conditions, resided in families experiencing difficulty paying medical bills -- a notable jump from 21 percent in 2003, based on a new national study conducted by the Center for Studying Health System Change (HSC). While trouble paying medical bills remains especially severe and continues to climb among uninsured people with chronic conditions (62%), these financial burdens are also substantial and expanding among those carrying private insurance and earning higher incomes. Of the more than 20 million chronically ill adults facing medical bill problems in 2007, one in four went without necessary medical care, half postponed care, and more than half skipped a prescription medication due to cost concerns.

Rising Rates of Chronic Conditions and Obesity

In 2007, 39 percent of the working-age population -- approximately 72 million individuals -- reported having at least one chronic health condition, including diabetes, asthma, or depression. This marked a meaningful rise from 35 percent in 2003 and 34 percent in 2001, according to HSC's 2007 Health Tracking Household Survey (see Data Source). Independent research corroborates that a growing share of Americans are coping with chronic conditions.1

The growing prevalence of chronic health conditions is tightly connected to surging obesity rates across the U.S. population, particularly for diabetes, hypertension, and heart disease. Between 2003 and 2007, the share of working-age Americans classified as obese -- those with a body mass index of 30 or higher -- rose from 25 percent to 29 percent (findings not shown). Chronic conditions develop at markedly higher rates among obese individuals. In 2007, 55 percent of obese working-age people reported at least one chronic condition, compared with 30 percent among those at a normal weight and 36 percent among those classified as overweight.

Declining Private Coverage

The share of working-age individuals with chronic conditions carrying private insurance has eroded steadily throughout this decade. In 2007, 65 percent held private coverage (see Figure 1) -- a decline from 68 percent in 2003 and 71 percent in 2001 (data not shown). Roughly one-fifth of working-age adults with chronic conditions were enrolled in public insurance programs, chiefly Medicaid and Medicare, in 2007 -- an increase from 17 percent in 2003 and 16 percent in 2001.

The expansion of public coverage helped offset a significant portion of the decline in private insurance, resulting in comparatively steady rates of uninsurance among working-age adults with chronic conditions between 2001 and 2007. In 2007, 13 percent of working-age people with chronic conditions remained uninsured.

Figure 1: U.S. Working-Age Adults with Chronic Conditions, by Insurance Status, 2007

Medical Bill Problems on the Rise

In 2007, 28 percent of working-age adults with chronic conditions -- representing more than 20 million people -- indicated that their families had experienced difficulty paying medical bills over the preceding year, a significant jump from 21 percent in 2003 (see Table 1).

From 2003 to 2007, the prevalence of medical bill problems rose considerably for Americans across all income levels and health status categories. However, the weight of medical debt falls disproportionately on those with health problems. Adults with chronic conditions were more than twice as likely as healthy adults to live in families struggling with medical bill problems (28% vs. 13% in 2007).2

Among low-income individuals -- those earning less than 200 percent of the federal poverty level, or $41,300 for a family of four in 2007 -- the frequency of medical bill problems is particularly high. Close to half (47%) of low-income working-age adults with chronic conditions reported trouble paying medical bills in 2007 -- a substantial jump from 35 percent in 2003.

Table 1: Problems Paying Medical Bills, U.S. Working-Age Adults, 2003-2007

Uninsured Particularly Vulnerable, but Insured Face Bill Problems, Too

Working-age individuals with chronic conditions who lack insurance face acute vulnerability to medical bill problems: 62 percent, or 5.7 million people, lived in families grappling with such challenges -- a sharp rise from 45 percent in 2003. Yet even those carrying private insurance are not shielded from financial strain: one in five privately insured adults with chronic conditions (9.4 million people) were in families with medical bill problems -- up from 16 percent in 2003. Among privately insured, low-income individuals, 37 percent -- exceeding 2 million people -- reported family medical bill problems, highlighting the constraints of private insurance alone in protecting people from the steep costs of managing chronic conditions.

The prevalence of medical debt generally climbs alongside increases in out-of-pocket spending on health care. Nevertheless, between 2003 and 2007, when medical debt rates rose substantially, there was no corresponding uptick in the share of people whose families had out-of-pocket medical spending that exceeded particular thresholds of family income (see Supplementary Table 1). For instance, the percentage of working-age individuals with chronic conditions whose out-of-pocket medical expenses exceeded 5 percent of family income held steady overall. Among low-income adults with chronic conditions, this proportion actually decreased (from 38% in 2003 to 31% in 2007). These same patterns persisted at the 2.5 percent and 10 percent spending thresholds of family income as well.

Yet medical debt continued to climb during this same period. One critical explanation for this apparent contradiction may be that as families accumulate medical debt they cannot pay off over time, they begin to feel financial pressure even at lower levels of out-of-pocket spending.3 This dynamic is especially relevant for low-income families, which tend to have little if any discretionary income or savings, and for whom even modest out-of-pocket costs can lead to medical debt. Indeed, among low-income adults with chronic conditions whose family out-of-pocket medical spending amounted to no more than 2.5 percent of income, 36 percent reported medical bill problems in 2007 -- a marked jump from 22 percent in 2003 (see Supplementary Table 2).

Medical Debt Linked to Access Problems

Among working-age adults with chronic conditions, those carrying medical bill problems were several times more likely to forgo or postpone necessary care compared with those who did not face such financial difficulties (see Table 2). In 2007, among chronically ill individuals whose families had trouble paying medical bills, one in four (5.1 million people) went without needed care, half (10 million people) delayed necessary care, and 56 percent (11.3 million people) did not obtain needed prescription drugs because of cost considerations. The estimates of unmet need and delayed care reflect significant increases since 2003.

While these access problem rates are elevated overall, the difficulties remain particularly acute among the uninsured. Among uninsured individuals with chronic conditions and medical bill problems, 38 percent went without needed care, 65 percent delayed care, and 73 percent failed to fill a prescription due to cost concerns.

Access problem rates for the privately insured with medical bill problems, though lower than among the uninsured, remain substantial: 17 percent went without needed care, 43 percent delayed care, and 45 percent skipped a prescription because of cost concerns. While access problem rates held steady -- at elevated levels -- for the uninsured with medical debt between 2003 and 2007, unmet need and delayed care among the privately insured with medical debt grew significantly. This finding aligns with trends of increased patient cost sharing in commercial insurance plans during this period.4

Although less common, some working-age, chronically ill adults with medical bill problems reported that their outstanding medical debt led providers to refuse care. In 2007, roughly 4 percent of working-age, chronically ill adults with medical bill problems indicated that medical providers had turned them away in the past 12 months specifically because of their medical debt (data not shown). Among uninsured, chronically ill adults with medical bill problems, 13 percent reported being denied care.

Table 2: Access Problems for People with Chronic Conditions, by Insurance Status and Family Medical Bill Problems, 2003-2007

Implications

The increasing prevalence and mounting financial burden of chronic conditions mean that a record number of Americans are forgoing or delaying medical care because they worry about affording treatment. The uninsured chronically ill -- the majority of whom have low incomes -- shoulder the heaviest cost burdens and are the most likely to skip or postpone needed medical care. Access barriers for the uninsured are compounded by their poorer health status: In 2007, 51 percent of uninsured, working-age chronically ill adults -- nearly 5 million people -- reported being in fair or poor health, compared with 29 percent of the privately insured chronically ill.

While some assume that adults with serious health problems can qualify for public insurance, many chronically ill, working-age adults in poor health fail to meet the strict income requirements or eligibility categories for Medicaid, nor do they satisfy the permanent-disability standard for Medicare. At the same time, their health conditions frequently make purchasing coverage on the individual insurance market prohibitively expensive, leaving them without any insurance.

Although their access difficulties are not as pronounced as those facing the uninsured, individuals with chronic conditions who carry private insurance also grew more likely to report medical bill problems and to reduce medical care utilization because of cost concerns between 2003 and 2007.

In recent years, many employers have addressed rising health care costs by shifting more expenses to employees through higher deductibles and copayments. Some employers have also trimmed benefits and transitioned from fixed-dollar copayments to percentage-based coinsurance. While these measures are intended to discourage unnecessary utilization, greater patient cost sharing can also suppress the use of clinically important services that help prevent or manage chronic conditions. Indeed, prior research has demonstrated that higher cost sharing for prescription drugs can reduce patient adherence to medication regimens and, as a consequence, trigger increased use of costly medical services -- such as emergency department visits -- for chronic conditions ranging from diabetes to congestive heart failure to schizophrenia.5

Such evidence indicates that relying on blunt instruments like across-the-board copayment hikes may prove counterproductive for employers aiming to control health costs. By contrast, some large employers have adopted value-based benefit designs, in which cost sharing is lowered or eliminated for certain drugs and preventive services considered clinically valuable and cost effective. Research suggests that this approach boosts patient adherence and may generate cost savings along with favorable clinical outcomes.6,7 Broader adoption of value-based benefit structures by employers and insurers could offer financial relief to the many individuals living with chronic conditions who are struggling under heavy out-of-pocket expenses.

Managed care products built around narrow networks of physicians and hospitals may represent another avenue for alleviating financial strain among people with chronic conditions. Such products generally feature lower premiums and reduced out-of-pocket requirements. While many consumers strongly rejected narrow-network products in the past, escalating costs since then may have shifted their willingness to receive care within a more restrictive framework.

In 2007, more than three in five adults with chronic conditions expressed willingness to accept a limited choice of physicians and hospitals in exchange for lower out-of-pocket health care costs (see Supplementary Table 3). While the willingness to trade provider choice for cost savings is greater among those with medical debt problems, it is also notably high for those without debt problems, indicating that affordability concerns are pervasive even among individuals who have managed to stay current on their medical bills. Overall, willingness to trade choice for cost savings remained stable between 2003 and 2007, but higher-income individuals with medical debt increased their willingness by a significant margin -- a reflection of the growing impact of cost concerns on people with middle incomes and above.

For the expanding population of Americans living with chronic conditions, the outlook is bleak. The findings reported here draw from a survey conducted in 2007, before the economic downturn that followed. Since then, federal and state budget crises, rising unemployment, restricted credit, and other worsening economic indicators all point to deepening financial pressures and access problems for Americans managing chronic health problems.

Notes

1. These estimates are based on a selected number of the most prevalent chronic conditions and do not encompass all chronic conditions. However, trends in chronic condition prevalence are consistent with other studies, including: Anderson, Gerard, and Jane Horvath, "The Growing Burden of Chronic Disease in America," Public Health Reports, Vol. 119 (May/June 2004); Paez, Kathryn Anne, Lan Zhao and Wenke Hwang, "Rising Out-of-Pocket Spending for Chronic Conditions: A Ten-Year Trend," Health Affairs, Vol. 28, No. 1 (January/February 2009).

2. Healthy adults are defined as those reporting excellent or very good health with no reported chronic conditions.

3. Cunningham, Peter J., Carolyn Miller and Alwyn Cassil, Living on the Edge: Health Care Expenses Strain Family Budgets, Research Brief No. 10, Center for Studying Health System Change, Washington, D.C. (December 2008).

4. Claxton, Gary, et al., Employer Health Benefits: 2008 Annual Survey, Kaiser Family Foundation, Washington, D.C., and Health Research and Educational Trust, Chicago (2008).

5. Goldman, Dana P., Geoffrey F. Joyce and Yuhui Zheng, "Prescription Drug Cost Sharing: Associations with Medication and Medical Utilization and Spending and Health," Journal of the American Medical Association, Vol. 298, No. 1 (July 4, 2007).

6. Chernew, Michael E., et al., "Impact of Decreasing Copayments on Medication Adherence Within a Disease Management Environment," Health Affairs, Vol. 27, No. 1 (January/February 2008).

7. Mahoney, John J., "Value-Based Benefit Design: Using a Predictive Modeling Approach to Improve Compliance," Supplement to the Journal of Managed Care Pharmacy, Vol. 14, No. 6, S-b (July 2008).

Supplementary Tables

Supplementary Table 1: Out-of-Pocket Costs Relative to Income for Working-Age Adults With Chronic Conditions, 2003-2007
Supplementary Table 2: Working-Age Adults with Chronic Conditions with Medical Bill Problems by Out-of-Pocket Spending, 2003-2007
Supplementary Table 3: Willingness to Trade Provider Choice for Lower Costs, 2003-2007

Data Source and Funding Acknowledgements

This Tracking Report presents findings from the HSC 2007 Health Tracking Household Survey and the HSC 2001 and 2003 Community Tracking Study Household Surveys. All three surveys drew on nationally representative samples of the civilian, noninstitutionalized population. Sample sizes comprised approximately 60,000 people in 2001, 47,000 people in 2003, and 18,000 people in 2007. Estimates for working-age adults are based on samples of 39,000 in 2001, 30,000 in 2003, and 10,000 in 2007. Survey response rates were 59 percent in 2001, 57 percent in 2003, and 43 percent in 2007. Population weights adjust for probability of selection and differences in nonresponse based on age, sex, race/ethnicity, and education. Questionnaire design and data collection methods were comparable across all three surveys.

Each survey asked adult respondents whether they had been diagnosed with one or more of over 10 chronic conditions and whether they had visited a doctor in the past two years for the condition. The list of chronic conditions includes asthma, arthritis, diabetes, chronic obstructive pulmonary disease, heart disease, hypertension, cancer, benign prostate enlargement, abnormal uterine bleeding, and depression. Because the list of conditions is not exhaustive, the estimate of chronic condition prevalence is likely conservative.

Funding Acknowledgements: This research was funded by the Robert Wood Johnson Foundation. The HSC 2007 Health Tracking Household Survey and HSC 2003 and 2001 Community Tracking Study Household Surveys used for the analysis were funded by the Robert Wood Johnson Foundation.

Sources and Further Reading

CDC — About Chronic Diseases — The CDC tracks the prevalence of chronic conditions including diabetes, asthma, and heart disease discussed in this report, along with their connection to obesity rates in the U.S. population.

JAMA — Prescription Drug Cost Sharing: Associations with Medication and Medical Utilization — The Goldman et al. study in the Journal of the American Medical Association, directly cited in this report, demonstrates that higher cost sharing reduces medication adherence and increases emergency department use for chronic conditions.

Health Affairs — Rising Out-of-Pocket Spending for Chronic Conditions — The Paez et al. study published in Health Affairs, cited in this report's endnotes, documents the ten-year trend of increasing out-of-pocket costs for people living with chronic conditions.

KFF — Employer Health Benefits Survey Archives — The Kaiser Family Foundation / HRET Employer Health Benefits 2008 Annual Survey, cited directly in this report, tracks the rising deductibles and copayments that drive medical bill problems for the chronically ill.

CMS — National Health Expenditure Data — Centers for Medicare and Medicaid Services data on national health spending provide context for the rising health care costs that fuel medical debt among the chronically ill.

Robert Wood Johnson Foundation — RWJF funded this research and all three HSC surveys used in the analysis.