Out-of-pocket financial burden for low-income families with children: socioeconomic disparities and effects of insurance

Health Services Research, Dec, 2005 by Alison A. Galbraith, Sabrina T. Wong, Sue E. Kim, Paul W. Newacheck

Socioeconomic disparities have been documented for children and adults in access to and use of health care, and in health outcomes (Agency for Healthcare Research and Quality 2003). Socioeconomic disparities may also exist in the financial burden of illness, particularly since low-income individuals are more likely to lack the protection of health insurance (Holl et al. 1995; Institute of Medicine Committee on the Consequences of Uninsurance 2001). Even with insurance, cost is still reported as a large barrier to receiving needed care for those with lower incomes (Davidoff 2004).

Data from the 1970s and 1980s showed that poor and inadequately insured children and families experienced a greater burden of out-of-pocket (OOP) expenditures (Berki et al. 1985; Newacheck and Halfon 1986b; Wyszewianski 1986; Dicker and Sunshine 1988; Rasell, Bernstein, and Tang 1994). Since then, Medicaid expansions and the State Children's Health Insurance Program (SCHIP) have improved access and utilization for low-income women and children (Long and Marquis 1998; Banthin and Selden 2003; Szilagyi et al. 2004). While it has been documented that insurance coverage improves access and use for low-income children and adults (Newacheck 1988; St. Peter, Newacheck, and Halfon 1992; Newacheck et al. 1998; Kasper, Giovannini, and Hoffman 2000; Dubay and Kenney 2004), it is not clear whether insurance coverage has the presumed effect of reducing the financial burden of OOP health care expenditures. Medicaid expansions for children appear to have reduced the financial burden for families of Medicaid-eligible children (Banthin and Selden 2003). However, these children still had greater financial burden than higher-income children, and more than one-fifth of their families paid more than 10 percent of their family income for their child's health care expenditures. Other data from the 1996 Medical Expenditure Panel Survey (MEPS) showed that poor families appeared to be less likely to be protected from catastrophic health care expenditures compared with higher income families, regardless of the type of insurance (Waters, Anderson, and Mays 2004).

It is important to consider the financial burden of health care expenditures at the level of the family, particularly since children's access, utilization, and insurance coverage are intertwined with that of their parents (Newacheck and Halfon 1986a; Hanson 1998; Guendelman and Pearl 2004). Catastrophic costs for one family member may create a financial burden felt by the whole family, and could affect the decision to seek and pay for care for other family members. The issue of family financial burden has not been examined since the enactment of SCHIP. Many states have focused recent policy initiatives toward extending SCHIP coverage to parents of eligible children in an attempt to improve access to care for both children and parents. Hence, understanding financial burden at the family level takes on added importance, especially for low-income families targeted by public programs like SCHIP. Additionally, the separate effects of income and insurance have not been assessed in a multivariate manner that also controls for potential confounders such as health status and utilization.

In order to address these gaps, the objectives of this study were as follows: (1) to determine whether socioeconomic disparities exist in the financial burden of OOP health care expenditures for families with children and (2) to determine the extent to which health insurance coverage decreases the financial burden of OOP health care expenditures for low-income families with children.

METHODS

Data Source

This was a cross-sectional family-level analysis using the 2001 MEPS. MEPS is a continuous panel survey designed to be representative of the U.S. civilian non-institutionalized population. The Household Component (HC) of MEPS collected data on individual members of participating households through a series of five rounds of interviews for overlapping 2 1/2-year periods. In addition to collecting data from household interviews, one adult respondent in the household maintained diaries of health care use and expenditure information for all family members. The HC collected data in each round on each household member's use and expenditures for office- and hospital-based care, home health care, dental services, vision aids, and prescribed medicines; these data were summed across rounds to produce annual utilization and expenditure data. The pooled response rate for 2001 MEPS was 66 percent. This yielded a combined sample of 32,122 individuals and 12,852 families for the till-year 2001 MEPS.

Subjects

The subjects for this study were limited to families with at least one child under 18 years of age. Families were defined according to the Current Population Survey (CPS) as two or more persons living together in the same household who are related by blood or marriage.

Dependent Variables

Our main outcome variable was the family's relative financial burden, defined as the ratio of OOP family health care expenditures per $1,000 of family income. OOP expenditures were defined as the amount paid by the family for medical provider visits, nonphysician services, hospital inpatient stays, emergency room services, dental visits, home health care, and prescription medications. These expenditures included direct payments, deductibles, coinsurance, co-payments, and premiums. We measured OOP financial burden both with and without premiums included. The MEPS HC provided a monthly premium amount that we multiplied by the number of months of coverage to derive an annual premium. All family members with public insurance were assigned a premium value of zero, as premium data were not available for those publicly insured individuals who were required to pay modest premiums. We excluded 188 families with missing data on premiums from the analysis.