Financial Burden of Employer-Sponsored High-Deductible Health Plans for Low-Income Adults With Chronic Health Conditions

Abstract

This cohort study examines the prevalence of high out-of-pocket health care spending across health plans with different deductible levels among adults in low-income families who have chronic conditions.

High-deductible health plans have increased significantly over the last decade.¹ Adults in low-income families or with chronic health conditions are more likely to face high out-of-pocket spending on health care as a percentage of family income when they are enrolled in high-deductible health plans, compared with adults in higher-income families or healthier adults.^2,3 The extent of the financial burden at the national level of high-deductible health plans among adults who are low income and have chronic health conditions is not well-known.⁴ This study examines the prevalence of high out-of-pocket health care spending across health plans with different deductible levels among adults in low-income families who have chronic conditions.

Methods

We used 2011-2015 Medical Expenditure Panel Survey Household Component data on adults 19 to 64 years of age enrolled in employer-sponsored insurance plans throughout the year. The main sample focuses on low-income adults (family income <250% of the federal poverty level). We identified 20 chronic conditions based on the classification method developed by the Office of the Assistant Secretary of Health in the US Department of Health and Human Services (hypertension, congestive heart failure, coronary artery disease, cardiac arrhythmias, hyperlipidemia, stroke, arthritis, asthma, autism spectrum disorder, cancer, chronic kidney disease, chronic obstructive pulmonary disease, dementia [including Alzheimer disease and other senile dementias], depression, diabetes, hepatitis, HIV, osteoporosis, schizophrenia, and substance abuse disorders [drug and alcohol]).⁵ We examined treated conditions, defined as conditions for which individuals reported receiving any medical care. We defined family out-of-pocket health care financial burden as the ratio of total annual family out-of-pocket spending for health care services and premiums divided by total annual family disposable (after-tax) income, and used a 20% financial burden (family out-of-pocket health care burden exceeding 20% of family disposable income) as a measure of high burden.^2,6 Health plans were categorized as high deductible if the deductible levels exceeded the Internal Revenue Service threshold for high-deductible health plans, categorized as low deductible if deductibles were below that threshold, or as no-deductible health plans otherwise. All comparisons were made using 2-tailed t tests and results were deemed statistically significant at P < .05. This project has received approval from the Agency for Healthcare Research and Quality institutional review board.

Results

Among all adults (n = 33 619), the prevalence of a 20% burden was 7.3% (95% CI, 6.4%-8.3%; P < .001) for those enrolled in a high-deductible health plan vs 5.9% (95% CI, 5.2%-6.6%; P = .001) for those enrolled in a low-deductible health plan and 4.3% (95% CI, 3.7%-4.9%) for those enrolled in a no-deductible health plan (Table 1). Among low-income adults with no chronic condition or only 1 chronic condition, the prevalence of 20% burden among those enrolled in a high-deductible plan was 20.6% (95% CI, 16.6%-24.6%; P < .001) and the prevalence of 20% burden among those enrolled in a low-deductible plan was 17.5% (95% CI, 15.0%-20.0%; P < .001), compared with 11.0% (95% CI, 8.5%-13.4%) among those enrolled in a no-deductible plan. The prevalence of 20% burden was higher among low-income adults with 2 or more chronic conditions, at 46.9% (95% CI, 37.5%-56.3%; P < .001) for those enrolled in a high-deductible plan and 36.9% (95% CI, 31.3%-42.5%; P = .001) for those enrolled in a low-deductible plan, compared with 22.0% (95% CI, 14.9%-29.0%) among those enrolled in a no-deductible plan. The differences in burden across deductible levels remained similar when sociodemographic factors and self-reported health status were controlled for. Among low-income adults, those with high-deductible or low-deductible plans were more likely to face 20% burdens than those with no-deductible plans among individuals with diabetes (42.4% [95% CI, 27.8%-57.1%]; P = .005; and 31.9% [95% CI, 24.5%-39.3%]; P = .03; vs 19.1% [95% CI, 10.9%-27.4%]) and those with hypertension (38.2% [95% CI, 29.6%-46.8%] and 31.5% [95% CI, 26.4%-36.6%] vs 18.0% [95% CI, 12.6%-23.4%]; P < .001) (Table 2).

Table 1. Family Out-of-Pocket Health Care Burden Among Adults 19 to 64 Years of Age With Employer-Sponsored Insurance, 2011-2015^a,b.

Population Subgroup	High-Deductible Plan	Low-Deductible Plan	No-Deductible Planc
All Individuals (n = 33 619)
Disposable family income, mean (95% CI), 2015 $d	76 046e (73 639-78 452)	72 418 (70 830-74 006)	72 175 (69 517-74 834)
Family out-of-pocket expenditure, mean (95% CI), 2015 $
Health care services	1986 (1856-2116)f	1481 (1411-1551)f	1217 (1118-1316)
Health insurance premiums	3537 (3386-3689)f	3217 (3110-3323)f	2713 (2598-2828)
Adults with total family out-of-pocket health care burden >20% of disposable income, mean (95% CI), %h	7.3 (6.4-8.3)f	5.9 (5.2-6.6)g	4.3 (3.7-4.9)
Among Low-Income Enrollees (family income <250% of FPL) With No Chronic Conditions or Only 1 Chronic Condition (n = 5888)
Disposable family income, mean (95% CI), 2015 $	34 452 (32 985-35 920)e	32 386 (31 467-33 305)	32 335 (31 211-33 458)
Family out-of-pocket expenditure, mean (95% CI), 2015 $
Health care services	1316 (1145-1487)f	1084 (950-1217)g	771 (638-904)
Health insurance premiums	3125 (2858-3393)f	2837 (2589-3085)f	2232 (2020-2444)
Adults with total family out-of-pocket health care burden >20% of disposable income, mean (95% CI), %	20.6 (16.6-24.6)f	17.5 (15.0-20.0)f	11.0 (8.5-13.4)
Among Low-Income Enrollees (family income <250% of FPL) With ≥2 Chronic Conditions (n = 1099)
Disposable family income, mean (95% CI), 2015 $	27 561 (25 142-29 980)	27 454 (25 806-29 102)	28 998 (26 713-31 282)
Family out-of-pocket expenditure, mean (95% CI), 2015 $
Health care services	2967 (2076-3856)e	2097 (1675-2520)	1778 (1410-2146)
Health insurance premiums	2980 (2307-3654)	3138 (2702-3573)g	2328 (1889-2766)
Adults with total family out-of-pocket health care burden >20% of disposable income, mean (95% CI), %	46.9 (37.5-56.3)f	36.9 (31.3-42.5)g	22.0 (14.9-29.0)

Abbreviation: FPL, federal poverty level.

^aThe sample includes adults 19 to 64 years of age who were enrolled in employer-sponsored health insurance plans throughout the year and did not have any other type of private or public insurance. The estimates are population weighted, and standard errors are adjusted for the complex design of the Medical Expenditure Panel Survey. All dollar values were adjusted to 2015 dollars using the Consumer Price Index for All Urban Consumers.

^bBased on household-reported conditions that were coded into International Classification of Diseases, Ninth Revision, codes and then translated into Clinical Classification Software codes, we identified the following 20 chronic conditions: hypertension, congestive heart failure, coronary artery disease, cardiac arrhythmias, hyperlipidemia, stroke, arthritis, asthma, autism spectrum disorder, cancer, chronic kidney disease, chronic obstructive pulmonary disease, dementia (including Alzheimer disease and other senile dementias), depression, diabetes, hepatitis, HIV, osteoporosis, schizophrenia, and substance abuse disorders (drug and alcohol). This list of chronic conditions developed by a working group of the Office of the Assistant Secretary for Health in the US Department of Health and Human Services. We examined only treated conditions (ie, conditions for which individuals reported receiving any medical care).

^cBase group.

^dFamily is defined as Health Insurance Eligibility Units, which include adults plus family members, including children, who would typically be eligible for coverage under the adults’ private health insurance family plans. Family disposable income is defined as after-tax family income. (We adjusted family disposable income for income taxes and Social Security and Medicare taxes using the web-based version of the National Bureau of Economic Research TAXSIM model.)

^eStatistically significantly different, based on 2-sample t tests, from the no-deductible health plan enrollees at the 5% level.

^fStatistically significantly different, based on 2-sample t tests, from the no-deductible health plan enrollees at the 0.1% level.

^gStatistically significantly different, based on 2-sample t tests, from the no-deductible health plan enrollees at the 1% level.

^hTotal family out-of-pocket health care burden = (family out-of-pocket health care services expenditure + family out-of-pocket health insurance premium)/family disposable income.

Table 2. Family Out-of-Pocket Health Care Burden Among Low-Income (Family Income <250% of FPL) Adults 19 to 64 Years of Age With Employer-Sponsored Insurance and With Selected Chronic Conditions, 2011-2015^a,b.

Population Subgroup	High-Deductible Plan	Low-Deductible Plan	No-Deductible Planc
Among Low-Income Enrollees With Diabetes (n = 570)
Mean disposable family income, mean (95% CI), 2015 $d	30 774 (26 750-34 798)	28 041 (26 212-29 869)	30 980 (28 099-33 861)
Family out-of-pocket expenditure, mean (95% CI), 2015 $
Health care services	3041 (1828-4255)e	2386 (1579-3194)e	1482 (1153-1810)
Health insurance premiums	3129 (2153-4105)	2716 (2211-3222)	2774 (2156-3391)
Adults with total family out-of-pocket health care burden >20% of disposable income, mean (95% CI), %f	42.4 (27.8-57.1)g	31.9 (24.5-39.3)e	19.1 (10.9-27.4)
Among Low-Income Enrollees With Hypertension (n = 1323)
Disposable family income, mean (95% CI), 2015 $	28 641 (26 450-30 833)	28 121 (26 614-29 628)e	30 624 (28 513-32 734)
Family out-of-pocket expenditure, mean (95% CI), 2015 $
Health care services	2291 (1536-3046)e	1786 (1197-2375)	1364 (1062-1665)
Health insurance premiums	3061 (2446-3676)e	3015 (2555-3474)e	2276 (1907-2645)
Adults with total family out-of-pocket health care burden >20% of disposable income, mean (95% CI), %	38.2 (29.6-46.8)h	31.5 (26.4-36.6)h	18.0 (12.6-23.4)

Abbreviation: FPL, federal poverty level.

^aThe sample includes adults 19 to 64 years of age who were enrolled in employer-sponsored health insurance plans throughout the year and did not have any other type of private or public insurance. The estimates are population weighted, and standard errors are adjusted for the complex design of the Medical Expenditure Panel Survey. All dollar values were adjusted to 2015 dollars using the Consumer Price Index for All Urban Consumers.

^bWe only examined treated conditions (ie, conditions for which individuals reported receiving any medical care).

^cBase group.

^dFamily is defined as Health Insurance Eligibility Units, which include adults plus family members, including children, who would typically be eligible for coverage under the adults’ private health insurance family plans. Family disposable income is defined as after-tax family income. (We adjusted family disposable income for income taxes and Social Security and Medicare taxes using the web-based version of the National Bureau of Economic Research TAXSIM model).

^eStatistically significantly different, based on 2-sample t tests, from the no-deductible health plan enrollees at the 5% level.

^fTotal Family Out-of-Pocket Health Care Burden = (family out-of-pocket health care services expenditure + family out-of-pocket health insurance premium)/family disposable income.

^gStatistically significantly different, based on 2-sample t tests, from the no-deductible health plan enrollees at the 1% level.

^hStatistically significantly different, based on 2-sample t tests, from the no-deductible health plan enrollees at the 0.1% level.

Discussion

Among low-income adults enrolled in employer-sponsored insurance who had multiple chronic conditions and were enrolled in high-deductible health plans, almost half (46.9%) had a family out-of-pocket health care burden exceeding 20% of family disposable income. Although only 22% of the overall low-income population had full-year employer-sponsored insurance, their financial burden is of concern because, owing to the fact that they have offers of employer-sponsored insurance, they are likely not eligible for the premium and cost-sharing subsidies in the health care Marketplace that other adults in this income group can access. Moreover, they may not be eligible for Medicaid depending on their income and whether their state expanded Medicaid. For clinicians and patients, high out-of-pocket costs for low-income adults with employer-sponsored insurance may create a barrier to achieving effective treatment to manage multiple chronic conditions.