Is Temporal Concentration of Out-of-Pocket Costs a Driver of Medical Debt?

• In Event: Upfront Costs, Downstream Savings, and Financial Burden in Health Care

Abstract

Background: Affordability of health care is a key concern for U.S. households. In 2022, approximately 100 million Americans carried medical debt. A relatively understudied aspect of health care affordability is the temporal concentration of out-of-pocket costs—the extent to which liabilities cluster within short time intervals in ways that interact with household liquidity constraints. This study aims to characterize the temporal concentration of out-of-pocket costs in the U.S. civilian noninstitutionalized population and assess the extent to which this temporal concentration of costs contributes to broader health care affordability challenges.Methods: In this cohort study, we analyzed data from the 2022–2023 Public Use Files of the Medical Expenditure Panel Survey—a nationally representative survey of the U.S. civilian noninstitutionalized population. First, we developed a novel metric to quantify the concentration of a cumulative outcome on a continuous support, such as time. Subsequently, we applied it to monthly spending data to quantify how medical out-of-pocket costs at the household level are distributed throughout the calendar year. We then estimated the association between experiencing problems paying medical bills and the interaction of the temporal concentration of annual out-of-pocket costs and their overall magnitude, while controlling for household income.Results: The sample consisted of 4,273 households with annual medical out-of-pocket costs > $0. Our developed temporal concentration metric ranges from 0 to 1, with 0 indicating a continuous, uniform distribution of the cumulative outcome across the focal time interval and 1 indicating that the aggregate outcome occurred in a single event. The mean temporal concentration of annual out-of-pocket costs was 0.72 (SD = 0.25). When the annual out-of-pocket cost was relatively modest ($2,000 or less), households faced difficulty paying medical bills when the costs were highly concentrated in time (temporal concentration > 0.75), a finding consistent with liquidity constraints binding on short-term shocks. In contrast, when annual out-of-pocket costs were relatively high (>$2,000), overall spending levels, rather than their temporal concentration, appeared to drive affordability challenges.Discussion: This study contributes to the literature in two distinct ways. First, our developed metric of the concentration of a cumulative outcome on a continuous support fills a significant methodological gap and will enable policy researchers to gain new insights into complex relationships between irregular cumulative exposures and outcomes. Second, our findings demonstrate that temporal concentration of medical out-of-pocket costs can create affordability challenges even when the overall cost burden is relatively modest. While the timing of underlying health care needs is largely exogenous, the extent to which those needs translate into acutely concentrated financial liabilities is, in part, a policy choice. Thus, policymakers aiming to improve health care affordability may consider strategies that smooth patient cost exposure over time, thereby reducing the liquidity strain associated with short-horizon spending shocks.

Authors

• Michal Horný, University of Massachusetts at Amherst
  Presenting Author

• Catherine Lott, University of California, Berkeley
  Non-Presenting Co-Author