Risking Life and Limb: Estimating a Measure of Medical Care Economic Risk and Considering its Implications

This paper considers the risk of incurring future medical expenditures in light of a family's resources available to pay for those expenditures as well as their choice of health insurance. We model non-premium medical out-of-pocket expenditures and use the estimates from our model to develop a prospective measure of medical care economic risk estimating the proportion of families who are at risk of incurring high non-premium out-of-pocket medical care expenses in relation to its resources. We further use the estimates from our model to compare the extent to which different types of insurance mitigate the risk of incurring non-premium expenditures by providing for increased utilization of medical care. We find that while 21.3% of families lack the resources to pay for the median expenditures for their insurance type, 42.4% lack the resources to pay for the 99^th percentile of expenditures for their insurance type. We also find the mediating effect of insurance on non-premium expenditures to outweigh the associated premium expense for expenditures above $1804 for employer-sponsored insurance and $4337 for direct purchase insurance for those younger than age 65; and above $12 118 of expenditures for Medicare supplementary plans for those aged 65 or older. Published 2016. This article is a U.S. Government work and is in the public domain in the USA.