3433-vol. 6 issue 2-3.pmd - iarfc

Volume 6, Issue 2 & 3 33
Financial Stress Related to Health Care Costs
Health care costs have increased faster than incomes for many U.S.
families. Not surprisingly, a number of studies and government statistics
indicate that rising health care costs are putting a strain on household
budgets. Health care costs usurp dollars that could be spent on other
household expenses or invested for future financial goals. Approximately
18% of U.S. families spent more than 10% of their income on health insurance
premiums and out-of-pocket (OOP) health care costs in 2001-2002. Families
struggling with high health care expenses are more likely than other families to
report difficulties in obtaining needed care and often have trouble paying their
bills (Helman & Fronstin, 2006; Merlis, Gould, & Mahato, 2006). The result is
often increased indebtedness, a poor credit history resulting from unpaid
medical bills, and, in some cases, bankruptcy as health care expenses are
“juggled” with basic living costs. Medical debt is a major contributor to
bankruptcy. A recent study found that debt associated with a variety of
medical causes (e.g., illness or injury, lost income due to poor health, and
uncovered medical bills) contributed to about half of all bankruptcies
(Himmelstein, Warren, Thorne, & Woolhandler, 2005).
Among those at risk for medical debt problems are workers who lack
health insurance as a fringe benefit. In 2000, 63% of workers were covered by
employer health insurance. In 2006, less than 3 of 5 workers (59%) were
covered (Fuhrmans, 2006). Negative patient behaviors may also result from
high health care costs, such as delaying necessary medical treatment and
forgoing the use of prescription drugs. Persons experiencing financial
distress may also be unable to follow recommended health maintenance
practices (e.g., screening exams), resulting in a “catch 22” when poor health
practices almost inevitably result in additional health care expenses. Another
group at risk for financial distress is those with conditions such as obesity
and diabetes. According to a Rand Corporation study, average annual health
care costs for moderately obese people are about 20 to 30 percent higher than
health care costs for people of normal weight (Rand Corporation, 2004). Sadly,
obesity in the United States has reached epidemic proportions. Approximately
45 million American adults, or 25% of the adult population, are obese
with a body mass index (BMI), a health benchmark based on height and
weight, greater than 29.9 (U.S. Department of Health and Human Services,
2003).
Planning Strategies
Consumer Driven Health Care
Consumer-driven health care (CDHC) has been touted as a solution
to America’s health care crisis. Consumers have an increased financial stake in