How Family Income Impacts Out-of-Pocket, Catastrophic Spending on Insulin

Family income is a significant factor in the levels of out-of-pocket and catastrophic spending on insulin among insulin users, a study published in Health Affairs found.

The researchers leveraged 2017 and 2018 data from the Medical Expenditure Panel Survey (MEPS), both the household and insurance components, to inform their study. The survey covered over 62,300 participants, most of whom received coverage for their insulin medication through Medicare (41.1 percent) or private insurance (35.7 percent).

The study focused on out-of-pocket healthcare spending and catastrophic spending on insulin.

Median annual out-of-pocket healthcare spending on insulin reached $97.72 per year, with wide variation based on insurance. Overall, one out of every seven insulin users reached catastrophic spending, with over 40 percent of their income after covering basic necessities.

Individuals who covered their own insulin costs had the highest median annual out-of-pocket healthcare spending on insulin at $205.64. They were followed by individuals with private insurance ($175) and Medicare beneficiaries ($122.67). 

Participants who paid for their insulin treatments on their own had 662.9 percent higher out-of-pocket healthcare spending than Medicare beneficiaries.

Medicaid beneficiaries had the lowest median annual out-of-pocket healthcare spending at $0.

The researchers found that income might play a role in out-of-pocket spending burden. Every $10,000 increase in household income was associated with a 3.2 percent increase in out-of-pocket healthcare spending.

“Our out-of-pocket spending analyses can help promote an understanding of spending on insulin among all patients who use it in the US, as we did not restrict our study to those who used insulin persistently throughout the calendar year,” the researchers explained. 

“As a result, our estimates of out-of-pocket spending are lower than previously reported estimates, but they capture the entire population using insulin and are not biased toward those who can afford to continue to fill insulin prescriptions.”

Catastrophic spending on insulin also varied based on insurance type. Although Medicare beneficiaries had lower out-of-pocket healthcare spending on insulin, they had higher rates of catastrophic spending than individuals with any other insurance type.

More than six out of ten of the individuals in the study who experienced catastrophic spending on insulin were Medicare beneficiaries (61.4 percent). 

The other insurance types came nowhere close to that prevalence of catastrophic spending. A little over 15 percent were Medicaid beneficiaries, around 10 percent had private insurance, another 10 percent had other forms of insurance, and only 2.5 percent covered their own insulin.

Medicaid beneficiaries were 61 percent less likely to experience catastrophic healthcare spending on insulin compared to Medicare beneficiaries.

Medicare beneficiaries may be more susceptible to catastrophic spending on insulin for a few reasons. Their incomes tend to be lower than individuals who have private health insurance or who pay for their own insulin costs, which may explain why their catastrophic spending was higher than counterparts with these coverage types. 

Additionally, age, insulin dosage, and certain traits of Medicare coverage may boost Medicare beneficiaries’ insulin costs.

“Our study suggests that the largest driver of catastrophic spending is the pervasiveness of low family income among people in the US with diabetes who use insulin. However, other fac- tors, such as insurance coverage, can affect out-of-pocket spending and make a person more or less susceptible to catastrophic spending,” the researchers concluded.

The researchers noted that caps on out-of-pocket healthcare spending for insulin can be useful but do not account for factors such as family income. They urged policymakers to consider lowering the cap on insulin out-of-pocket healthcare spending. Additionally, they argued that regulating the insulin list price could make a significant impact on out-of-pocket costs and catastrophic spending.

Some payers have eliminated out-of-pocket healthcare costs for insulin altogether. Others have collaborated with drug manufacturers to reduce the cost of insulin.

Experts also have urged employers to take an active role in lowering insulin costs for employees.