Paying Out-of-Pocket

September 2017

The Healthcare Spending of 2 Million US Families

September 2017

Payroll checks next to a computer monitor displaying growth charts.

Healthcare costs are rising for families. In 2015, the US spent 18 percent of Gross Domestic Product (GDP) on healthcare, up from 13 percent in 2000. For every dollar spent on healthcare, families paid 11 cents out-of-pocket and 28 cents after including insurance costs. While the Centers for Medicare and Medicaid Services projects health spending to continue to grow faster than GDP through 2025, the future of family-paid healthcare costs also rests with policy choices currently being debated. Out-of-pocket costs are a key piece of that picture.

The JPMorgan Chase Institute set out to better understand out-of-pocket healthcare spending among US households. Building off a sample of 2.3 million de-identified core Chase customers aged 18 to 64 between 2013 and 2016, we created the JPMorgan Chase Institute Healthcare Out-of-pocket Spending Panel (JPMCI HOSP). We explored the levels, concentration, and growth of out-of-pocket healthcare spending and the implications of these spending trends for overall household financial health. The JPMCI HOSP provides a first-ever look into out-of-pocket healthcare spending for households on a month-to-month basis, at the state, metro, and county level, and as recent as 2016. In this report, we describe the creation of, and initial insights gleaned from, this new data asset.

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Finding One

Out-of-pocket healthcare spending grew between 2013 and 2016, but remained a relatively constant share of take-home income.

Families spent on average $714 or 1.6 percent of their take-home income on out-of-pocket healthcare spending in 2016. Out-of-pocket healthcare spending grew by an average annual rate of 4.3 percent.

$747 drop in monthly mortgage payment is equal to 5% of monthly income

View Text Version Finding One chart

Finding Two

The financial burden of out-of-pocket healthcare spending was highest for older, lower-income, and female account holders and increased in 2016 for low-income account holders.

$747 drop in monthly mortgage payment is equal to 5% of monthly income

View Text Version Finding Two chart

Finding Three

Doctor, dental, and hospital payments accounted for more than half of observed healthcare spending. Dental and hospital payments were less common but larger in magnitude.

$747 drop in monthly mortgage payment is equal to 5% of monthly income


$747 drop in monthly mortgage payment is equal to 5% of monthly income

View Text Version Finding Three chart

Finding Four

Out-of-pocket healthcare spending was highly concentrated among a few families—often the same families year-over-year. The top 10 percent spent 9 percent of their take-home income on out-of-pocket healthcare expenses.

Out-of-pocket healthcare spending was highly concentrated among a small segment of the population. The top 10 percent of healthcare spenders contributed 49 percent of total out-of-pocket spending in 2016. Seventeen percent of families had no healthcare spending in 2016.

$747 drop in monthly mortgage payment is equal to 5% of monthly income


The top 10 percent of families in terms of healthcare burden spent 9 percent of their take-home income on out-of-pocket healthcare expenses—as much as a typical family spends on all combined utility and cell phone bills in a year—and 48 percent of them did so again the following year.

$747 drop in monthly mortgage payment is equal to 5% of monthly income

View Text Version Finding Four chart

Finding Five

Families made larger healthcare payments in the months and the years when they had a higher ability to pay. Elevated dental and hospital payments primarily contributed to high healthcare spending.

Monthly out-of-pocket healthcare spending was highly correlated with monthly take-home income. In each year during 2013-2016, families had the highest out-of-pocket healthcare spending in months of elevated income: March and April (tax refund season), October, and December.

$747 drop in monthly mortgage payment is equal to 5% of monthly income


High out-of-pocket healthcare spending:

  • Large: at least $1,000
  • Significant: at least 2 percent of take‑home income

Among families with normal healthcare spending in 2015, those who transitioned to higher spending in 2016 also experienced faster growth in take-home income (4 percentage points higher) and liquid assets (6 percentage points higher) than families who exhibited normal healthcare spending again in 2016.


$747 drop in monthly mortgage payment is equal to 5% of monthly income

View Text Version Finding Five chart

Finding Six

There was dramatic variation in out-of-pocket healthcare spending across and within our 23 states. Families in Colorado spent the most on healthcare, while families in Louisiana spent the highest fraction of their gross income on healthcare.


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States with highest and lowest spending level in 2016

Top 5 States Average Spending
Bottom 5 States Average Spending
Source: JPMorgan Chase Institute

1 Source of uninsurance rate data: Enroll America’s Uninsured Estimates for Non-Elderly Adults (2013-2016)

2 Average estimated annual gross income reflects the annual pre-tax estimate of family income for each account holder ascertained by JPMorgan Chase using individual, third-party, and zip code-level data.


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JPMCI HOSP Data Asset

From a universe of 37 million checking account holders, we assembled a de-identified sample of approximately 2.3 million Chase customers. We offer a family perspective on out-of-pocket healthcare spending among adults aged 18 to 64.

View Text Version JPMCI HOSP Data Asset

Conclusion

The JPMorgan Chase Institute Healthcare Out-of-pocket Spending Panel (JPMCI HOSP) offers several key insights as we evaluate proposed changes to our healthcare policies. First, out-of-pocket healthcare expenses represent a stable share of household income in aggregate, but are a source of financial strain for certain families. Healthcare reform should take into consideration the impact on households who are more financially burdened by healthcare expenses—specifically older, low-income, and female account holders. Second, healthcare spending may be large, unexpected, and concentrated in the months and years when families have a higher ability to pay. As such, consumers would benefit from more transparent pricing and payment options to better manage healthcare expenses. Third, cost containment measures, including value-based care, could have meaningful impacts on costs borne by families, not just by insurers and healthcare providers. Finally, wide variation in levels and burden of healthcare spending across geographies underscores the importance of healthcare as a state and local policy issue.

Download Full Report “The Consumer Spending Response to Mortgage Resets”Download the Executive Summary “The Consumer Spending Response to Mortgage Resets: Executive Summary”