Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

High and rising out-of-pocket expenditures on health care by U.S. households are a matter of substantial concern among policymakers and the general public. In a recent Commonwealth Fund study, nearly one third of all adults reported facing significant medical bill problems during the past year, including high out-of-pocket expenditures, medical debt, inadequate access to care for financial reasons, and non-payment of medical bills. Families face especially large exposure to financial difficulties for mental illness because mental health treatment continues to be significantly less well-covered than other medical services (Zuvekas and Meyerhoefer, 2005).

Using pooled data from the 2003-2005 Medical Expenditure Panel Survey, we examine the extent to which families with mental health issues incur high out-of-pocket burdens for medical services and the extent to which mental health treatment contributes to these burdens. We build on recent work by Selden (2007) which finds a high concentration of family spending on medical services within the year, often coinciding with dips in income especially among lower-income families. Spikes in medical spending and associated dips in income are likely to be particularly burdensome for lower-income families who have fewer assets to smooth out these shocks. Common mental disorders, such as depression, are both chronic and episodic, leading to variation in treatment expenditures during the year. Episodes of mental illness may also lead to loss of income because of the inability to work and potentially even the loss of employment related health insurance coverage, drastically increasing exposure to medical bills.

MEPS data for 2003-2005 were edited to yield month-by-month measures of spending on mental health services, all other medical services, and insurance premiums, as well as earned and unearned income. We then examine the frequency with which family expenditures exceeded twenty percent of family income, computed at the annual, quarterly, and monthly levels and the extent to which spending on mental health treatment contributes to these high burdens for families with mental health issues. We next examine the relationship between spending, income shocks, and changes in health insurance coverage. In doing so, we compare the prevalence of these high burdens across subgroups defined by poverty level, age, insurance status, race/ethnicity, health and mental health status.