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High Out-of-Pocket Medical Spending among the Poor and Elderly in Nine Developed Countries

Keywords: Out-of-pocket; insurance design; financing equity; access; international comparison.

Objective: The design of health insurance, and the role out-of-pocket (OOP) payments play in it, is a key policy issue as rising health costs have encouraged greater cost-sharing measures. This paper compares the percentage of Americans spending large amounts OOP to meet their health needs with percentages in eight other developed countries. By disaggregating by age and income, the paper focuses on the poor and elderly populations within each.

Data Source: The study uses nationally representative household survey data made available through the Luxembourg Income Study. It includes nations with high, medium, and low levels of OOP spending.

Study Design: Households have high medical spending when their OOP expenditures exceed a threshold share of income. I calculate the share of each nation's population, as well as subpopulations within it, with high OOP expenditures.

Principal Findings: The United States is not alone in exposing large numbers of citizens to high OOP expenses. In six of the other eight countries, one-quarter or more of low-income citizens devoted at least 5 percent of their income to OOP expenses, and in all but two countries, more than 1 in 10 elderly citizens had high medical expenses.

Conclusions: For some populations in the sample nations, health insurance does not provide adequate financial protection and likely contributes to inequities in health care delivery and outcomes.

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