Out-of-Pocket Healthcare Spending Increased Leading Up to Pandemic

The share of out-of-pocket healthcare spending for patients with employer-sponsored health coverage increased by nearly 2 percent between 2013 and 2019, according to an issue brief from the Employee Benefit Research Institute (EBRI).

Researchers used medical and pharmacy claims from the IBM Marketscan Commercial Claims and Encounters Database (CCAE). The brief reflects claims data for more than 45 million patients who were continuously enrolled in an employer-sponsored health plan for at least one year between 2013 and 2020.

The share of medical expenses that patients paid out of pocket increased from 17.4 percent in 2013 to 19 percent in 2019. The share of out-of-pocket costs declined to 16.2 percent in 2020 due to the COVID-19 pandemic.

Despite the pandemic-related decrease, the share of medical spending falling to patients is on an upward trajectory, researchers said.

In addition to the share of out-of-pocket spending rising, the amount patients paid increased. For example, the average patient with employer-sponsored health coverage spent $249 out of pocket in 2013 and $287 in 2019. Meanwhile, total out-of-pocket spending dropped to $205 in 2020.

At the highest percentile, out-of-pocket expenses rose from $2,792 in 2013 to $3,295 in 2019. Similarly, the share of out-of-pocket costs went from 39.9 percent in 2013 to 44.7 percent in 2019 at the 90th percentile.

Out-of-pocket healthcare spending likely decreased during the COVID-19 pandemic due to patients putting off non-essential care and regulatory waivers that eliminated cost-sharing for virtual visits, researchers noted.

Before the pandemic hit, the share of medical spending paid out of pocket increased the most for outpatient services, the brief found. In 2013, 16.7 percent of out-of-pocket costs were for outpatient services, compared to 19.4 percent in 2019.

The share of out-of-pocket spending on prescription drugs increased from 23.8 percent in 2013 to 25.1 percent in 2019. The percentage of out-of-pocket spending on inpatient services stayed low at 6.2 percent in 2013 and 6.6 percent in 2019.

From 2019 to 2020, the share of out-of-pocket outpatient spending saw the greatest decline of 2.9 percentage points. Out-of-pocket spending on prescription drugs fell by 2.3 percentage points, while inpatient spending fell by just six-tenths of a percentage point.

The total amount of patient spending on outpatient services saw the highest decrease between 2013 and 2019, rising from $470 to $631. Inpatient spending increased from $109 in 2013 to $127 in 2019, while prescription drug spending declined slightly from $158 to $148 and increased again to $151 in 2020.

Researchers analyzed the different employer-sponsored health plans to understand if out-of-pocket spending varied among plan types.

Out-of-pocket spending was similar for patients covered under a preferred provider organization (PPO), point of service (POS), exclusive provider organization (EPO), and health maintenance organization (HMO) plan.

For example, patients enrolled in an employer-sponsored HMO/EPO plan paid 12.3 percent of their total spending out of pocket in 2019 compared to 10.9 percent in 2013. For patients in a PPO or POS plan, the share of out-of-pocket costs remained at 17.9 percent in 2013 and 2019.

However, out-of-pocket healthcare costs decreased slightly for patients enrolled in high deductible health plans (HDHPs). The share of expenses that were out-of-pocket fell from 31.7 percent in 2013 to 29.9 percent in 2019.

Although patients enrolled in HDHPs saw out-of-pocket decreases, researchers attributed much of the overall out-of-pocket spending increase to people enrolling in health savings account (HSA)-eligible plans and HDHPs. Between 2013 and 2020, the share of patients enrolled in HDHPs went from 13 percent to 28 percent.

Patients with more health conditions were also likely to spend more out of pocket for healthcare, the brief noted. For example, an average patient with high cholesterol spent more out of pocket than general patients ($882 versus $205).

Some conditions require more extensive care, leading to patients paying a smaller share of their expenses out of pocket due to meeting their deductible or out-of-pocket maximum. In 2020, patients with metastatic cancer paid only 3.5 percent of their total healthcare spending out of pocket, but their median out-of-pocket spending was $3,500.