Medical Bill Problems Steady for U.S. Families, 2007-2010

Medical Bill Problems Steady for U.S. Families, 2007-2010

Tracking Report No. 28
December 2011
Anna Sommers, Peter J. Cunningham

Approximately one in five Americans belonged to families that reported difficulty paying medical bills in 2010, a rate essentially unchanged from 2007, according to a new national study conducted by the Center for Studying Health System Change (HSC). Considering the severe recession of 2007-09, the slow pace of economic recovery, and the continued rise in health care costs that outstripped income growth, it is somewhat unexpected that the rate of medical bill difficulties did not climb between 2007 and 2010. The stable rate of medical bill problems may be partly attributable to reduced utilization of medical care—both among individuals who lost employment and health coverage during the downturn and among those who scaled back on health services amid economic uncertainty. Although problems paying medical bills held steady in recent years, the share of Americans in families experiencing medical bill difficulties was notably higher in 2010 than in 2003—20.9 percent compared with 15.1 percent. Moreover, in 2010, many individuals in families struggling with medical bills continued to face significant financial hardships, with roughly two-thirds indicating trouble paying for other basic needs and one-quarter weighing the possibility of filing for bankruptcy.

Medical Bill Problems Stabilize as Consumers Cut Care

In the aftermath of the severe 2007-09 recession and the slow economic recovery that followed, the number of uninsured Americans grew from 42.8 million in 2007 to 51.7 million in 2010.1 During this same period, Americans reduced their consumption of medical services.2 Meanwhile, the share of Americans—roughly one in five—in families reporting difficulty paying medical bills held steady between 2007 and 2010, based on HSC's 2010 Health Tracking Household Survey (see Data Source and Figure 1). Nevertheless, since 2003, the proportion of individuals in families with medical bill difficulties has risen by more than one-third, climbing from 15.1 percent to 20.9 percent in 2010. This trend reflects a sustained, long-term erosion in the affordability of medical care, as health care spending growth has consistently outpaced economic growth and real household income.3

Nearly all individuals in families experiencing medical bill difficulties reported significant financial repercussions. For instance, two-thirds indicated trouble paying for other essential expenses, including food, clothing, or housing (see Table 1). Additionally, close to two-thirds had been contacted by a collection agency, which can damage a family's credit score.

Declaring bankruptcy represents an extreme financial outcome of medical bill difficulties. In 2010, one in four individuals with medical bill problems gave serious thought to filing for bankruptcy due to their medical debt—a proportion roughly comparable to that observed in 2007.4 Among those who contemplated bankruptcy, roughly one in five actually proceeded with a filing—amounting to approximately 5 percent of all individuals in families struggling with medical bill payments.

Figure 1 - People in Families with Medical Bill Problems, 2003-2010

Table 1 - Financial Consequences of Medical Bill Problems, 2010

Bill Problems Up for Nonelderly Since 2003...

The share of children and working-age adults (those aged 0-64) belonging to families with medical bill difficulties held constant between 2007 and 2010. However, the proportion of nonelderly individuals with medical bill problems has grown markedly, rising from 16.2 percent in 2003 to 22.4 percent in 2010.

A comparable pattern emerged among insured children and working-age adults—the share in families reporting medical bill difficulties plateaued between 2007 and 2010 but rose significantly between 2003 (14.3%) and 2010 (20.2%). Alongside the severe 2007-09 recession that fueled economic anxiety, employers during this period continued transferring health care costs to employees through greater patient cost sharing5—such as elevated deductibles, coinsurance, and copayments—pressuring individuals to alter how they sought health care. Following a spike in health care utilization between 2003 and 2007, the use of services among nonelderly insured individuals leveled off between 2007 and 2010.6

Highlighting the limited financial protection faced by the uninsured when it comes to health care expenses, uninsured children and working-age adults in 2010 were more likely to encounter medical bill problems (31.5%) than their insured peers (20.2%). The share of uninsured children and working-age adults experiencing medical bill difficulties grew significantly between 2003 and 2007 before stabilizing at 31.5 percent in 2010.

Between 2007 and 2010, uninsured nonelderly individuals scaled back their health care use, chiefly by reducing visits to office-based physicians.7 Furthermore, many individuals who lost health insurance between 2007 and 2010 tended to have fewer health conditions compared to those who were already uninsured. Consequently, the absence of an increase in medical bill problems among the nonelderly uninsured may partly reflect the fact that uninsured individuals were, on average, healthier and incurred lower medical expenses in 2010 relative to 2007.8

...and for Elderly, Too

Compared with younger populations, medical bill difficulties have historically been much less prevalent among individuals aged 65 and older,9 despite their higher out-of-pocket expenditures resulting from elderly individuals' greater health care requirements.10 In a notable upward trend, the share of elderly individuals reporting medical bill problems climbed from 6.9 percent in 2003 to 10.3 percent in 2010.

The proportion of seniors covered solely by Medicare who experienced medical bill problems nearly doubled between 2003 and 2007, increasing from 11.7 percent to 20.7 percent (see Supplementary Table 1). In a similar pattern, the share of seniors with Medicare plus supplemental private coverage—typically Medigap or employer-sponsored retiree plans—who reported medical bill difficulties rose from 5.3 percent in 2003 to 7.7 percent in 2010.

Low- to Middle-Income People Less Protected

Under health reform provisions, many individuals with incomes below 400 percent of the federal poverty level—equivalent to $88,200 for a family of four in 2010—will gain new pathways to secure more affordable health coverage. Beginning in 2014, Medicaid eligibility will be broadened to encompass nearly all individuals with incomes under 138 percent of poverty—or $30,429 for a family of four in 2010. Additionally, individuals with incomes between 138 percent and 400 percent of poverty in 2014 who lack employer-sponsored coverage will qualify for premium subsidies to buy private insurance through state health insurance exchanges. Those in this income bracket enrolled in exchange plans will also be eligible for cost-sharing subsidies designed to reduce their out-of-pocket expenses for care. The focus on low- to middle-income populations underscores the substantial and growing financial strain of medical care, even among individuals who have health insurance.

The proportion of children and working-age adults in low-income families—those below 138 percent of poverty—experiencing medical bill problems increased significantly between 2003 and 2010, from 23.7 percent to 29.2 percent. A parallel trend was observed for nonelderly individuals in families with incomes between 138 percent and 400 percent of poverty, where the share with medical bill difficulties grew from 19.7 percent in 2003 to 29.2 percent in 2010.

By contrast, the share of children and working-age adults in higher-income families—those at or above 400 percent of poverty—was considerably lower and remained roughly the same in 2003 and 2010 (7.9% vs. 9.2%).

Medical Debt Amounts Unchanged

Among those who reported difficulty paying medical bills, the average family medical debt stood at $6,500 in 2010 (findings not shown). Roughly one-third of Americans carrying medical debt owed upwards of $5,000 in medical bills in 2010, and about 60 percent owed $2,000 or more (see Table 2). No statistically significant shifts in debt amounts were detected between 2007 and 2010.

Furthermore, more than half of individuals with medical debt had paid off "none or a little" of what they owed. And more than half of those with medical debt anticipated that repayment would take longer than a year, while 17.4 percent expected it would require more than five years to settle their bills.

Table 2 - Difficulties Paying Off Medical Debts, 2007-2010

Medical Bill Problems and Access to Care

Difficulty paying medical bills can generate financial obstacles to obtaining needed health care. Individuals experiencing medical bill problems—whether insured or uninsured—demonstrate significantly elevated levels of unmet medical needs attributable to cost concerns when compared with those who do not face medical bill difficulties (see Table 3).

Among those with insurance, 9.2 percent of individuals facing medical bill problems reported unmet medical needs due to cost concerns in 2010, in contrast to just 1.4 percent of those without medical bill problems. Among uninsured individuals, 27.9 percent of those with medical bill difficulties reported unmet needs, compared with 8.6 percent of uninsured people who had no medical bill problems.

Table 3 - Access Problems for People with Medical Debt Problems Aged 64 and Younger, 2010

Implications

Following a pronounced increase between 2003 and 2007, the proportion of Americans belonging to families with difficulty paying medical bills remained stable between 2007 and 2010.

Provisions contained in the 2010 Patient Protection and Affordable Care Act (PPACA) are expected to lessen—though not wholly eliminate—financial pressures associated with paying medical bills for families earning below 400 percent of the federal poverty level. In 2014, nearly all individuals with incomes under 138 percent of poverty will become eligible for Medicaid. Similarly, federal premium subsidies for purchasing private coverage through state health insurance exchanges will become available in 2014 for those with incomes between 138 percent and 399 percent of poverty who lack access to employer-sponsored coverage. Individuals in this income range who are uninsured or who purchase nongroup insurance may be able to obtain more affordable coverage via the exchanges, and cost-sharing subsidies that cap out-of-pocket spending on services will help alleviate the financial weight of medical care. However, the majority of individuals in this income group already have employer-provided coverage and will be ineligible to buy subsidized plans through the exchanges unless their premiums surpass 9.5 percent of income.

Additional factors will influence whether Americans face fewer medical bill problems in the years ahead, with the most critical being the underlying trajectory of health care spending growth. Should wages continue to remain flat while health care costs keep rising faster than real income, the financial burden of health care is likely to become increasingly severe.

Notes

1. Estimates are derived from the 2007 and 2010 Center for Studying Health System Change Health Tracking Household Surveys and are broadly consistent with findings from other national surveys, including the Current Population Survey and the National Health Interview Survey.

2. Boukus, Ellyn R., and Peter J. Cunningham, Mixed Signals: Trends in Americans' Access to Medical Care, 2007-2010, Tracking Report No. 25, Center for Studying Health System Change, Washington, D.C. (August 2011).

3. Gould, Elise, and Heidi Shierholz, "A Lost Decade: Poverty and Income Trends Paint a Bleak Picture of Working Families," Economic Policy Institute (September 2010).

4. The change from 2007, when one in five reported considering bankruptcy, was statistically significant only at the p<.10 level.

5. Claxton, Gary, et al., "Health Benefits in 2010: Premiums Rise Modestly, Workers Pay More Toward Coverage," Health Affairs, Vol. 29, No. 10 (October 2010).

6. Boukus and Cunningham (August 2011).

7. Carrier, Emily, Tracy Yee and Rachel L. Garfield, The Uninsured and Their Health Needs: How Have They Changed Since the Recession? Kaiser Commission on Medicaid and the Uninsured, Washington, D.C. (October 2011).

8. Ibid.

9. Cunningham, Peter J., Trade-offs Getting Tougher: Problems Paying Medical Bills Increase for U.S. Families 2003-2007, Tracking Report No. 21, Center for Studying Health System Change, Washington, D.C. (September 2008).

10. Desmond, Katherine A., et al., The Burden of Out-of-Pocket Health Spending Among Older Versus Younger Adults: Analysis From the Consumer Expenditure Survey, 1998-2003, Medicare Issue Brief, Kaiser Family Foundation, Menlo Park, Calif. (September 2007).

Data Source

This Tracking Report draws on findings from the HSC 2010 and 2007 Health Tracking Household Surveys as well as the 2003 Community Tracking Study Household Survey. All three telephone surveys employed nationally representative samples of the civilian, noninstitutionalized population. For the first time, the 2010 survey incorporated a cell phone sample in response to the declining share of households with landline telephones. Sample sizes comprised roughly 47,000 individuals for the 2003 survey, approximately 18,000 for the 2007 survey, and about 17,000 for the 2010 survey. Response rates were 57 percent in 2003, 43 percent in 2007, and 46 percent and 29 percent, respectively, for the landline and cell phone samples in 2010. Population weights adjust for probability of selection and differences in nonresponse based on age, sex, race or ethnicity, and education. The weights also account for the heightened probability of selection in households using both landline and cell phones. Although all three surveys are nationally representative, the 2003 survey sample was primarily clustered in 60 representative communities, whereas the 2007 and 2010 surveys relied on a stratified random sample of the nation. Standard errors reflect the complex sample design of the surveys. Questionnaire design, survey administration, and the question wording of all measures used in this study were comparable across the three surveys.

Estimates of medical bill problems were based on the survey question, "During the past 12 months have you or your family had any problems paying medical bills?" This report adopts the perspective that observing medical bill problems at the family level is more appropriate, given that decisions regarding major expenditures and finances—including medical care—are typically made at the family level. This also means that the adverse effects of medical bill problems within a family will impact all members, not solely the individual(s) who incurred the medical bills. For this reason, the response to the medical bill problems question—posed only once per family—is attributed to all persons in the family. The estimates thus represent the percentage of persons in families experiencing medical bill problems.

Funding Acknowledgement

This research was supported by the Robert Wood Johnson Foundation (RWJF). The HSC 2007 and 2010 Health Tracking Household Surveys and the HSC 2003 Community Tracking Study Household Survey utilized for this analysis were also funded by RWJF.

Supplementary Table 1

Supplementary Table 1 - People in Families with Medical Bill Problems, by Health Insurance Coverage

TRACKING REPORTS are published by the Center for Studying Health System Change.
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President: Paul B. Ginsburg

Sources and Further Reading

U.S. Census Bureau — Health Insurance Coverage Statistics — The Census Bureau's Current Population Survey, cited in this report, tracks the number of uninsured Americans and insurance coverage trends over time.

CDC — National Health Interview Survey (NHIS) — The NHIS, referenced in this study's endnotes, provides annual data on the health status and insurance coverage of U.S. families.

CMS — National Health Expenditure Data — Centers for Medicare and Medicaid Services data on national health spending growth, which this report identifies as consistently outpacing economic growth and household income.

KFF — Employer Health Benefits Survey Archives — The Kaiser Family Foundation survey cited in this report documents trends in employer cost sharing, including rising deductibles and copayments that contributed to medical bill problems.

Robert Wood Johnson Foundation — RWJF funded the HSC Health Tracking Household Surveys and Community Tracking Study Household Surveys used in this research.

Health Affairs — Health Benefits in 2010: Premiums Rise Modestly — The Claxton et al. study in Health Affairs, directly cited in this report's endnotes, examining employer premium increases and cost-shifting trends.