Changes in out-of-pocket premium payments and cost-sharing provisions of ESHI in the 2000s, which are designed to control U.S. health care spending may also increase the financial burden on families who need medical care and may differentially affect families of different socioeconomic characteristics and health statuses. Additionally, the change in these cost-sharing provisions may also alter the entire shape of the out-of-pocket medical spending distribution. If such changes disproportionately increase the financial burden for families who are in the top percentiles of the distribution, cost-sharing provisions may further skew the concentration of out-of-pocket health care spending. Using quantile regressions, I assess whether the distribution of out-of-pocket spending has been affected by changes in ESHI to understand the effectiveness of the risk protection function of private health insurance against high expenses. A quantile regression is also used to decompose the difference in families’ out-of-pocket spending distributions into changes in the distribution of family characteristics and changes in the distribution of structural factors. The latter factor captures behavioral responses to unobserved changes in specific health insurance benefit provisions over the study period.
The empirical results show that those families who relied more on health care because of one or more family members’ existing health conditions were most affected by changes in cost sharing. In addition, increased exposure to premium payments and out-of-pocket medical spending occurred primarily for families at higher percentiles of the out-of-pocket spending distribution. One possible implication is that some families may have declined offers of employment-sponsored health insurance because of the decline in the value of risk protection these policies provided during the last decade. Interestingly, an increased burden is also observed for some families in the bottom of the out-of-pocket spending distribution. This suggests family payments for health insurance premiums rather than out-of-pocket spending for medical care per se imposed more of a financial burden on families who are less likely to be at high health risk.
