The Out-of-Pocket Price for a Healthy Life

The Out-of-Pocket Price for a Healthy Life

Why you should care

Because returning to good health can be ruinous. 

The Turner family’s decadelong health struggles have put them in a 10 percent club that no one wants to belong to. In 2000, Annette Turner, a holistic life coach and personal trainer in Utah, was diagnosed with a rare form of cervical cancer. The family was able to manage her medical costs, but eight years later, her husband, Troy, an equipment specialist for the U.S. Department of Defense, was diagnosed with non-Hodgkin lymphoma.

Troy’s government medical insurance covered 80 percent of some of his treatments, but the cost of other tests fell fully on the Turners. It left them with $45,000 to $50,000 in out-of-pocket expenses, according to Annette, which eventually forced them to file for bankruptcy. Then in 2015, another devastating blow: 8-year-old Chrissy was diagnosed with a rare form of breast cancer. The Turners’ overall out-of-pocket tab: well over $100,000.

And that’s how the Turners joined the wrong kind of 10 percent club. According to a recent report from the JPMorgan Chase Institute:

The top 10 percent of health care spenders contribute nearly half of all U.S. out-of-pocket expenditures on health care.

Star-crossed families in that 10 percent shell out on average about 9 percent of their income for medical expenses, which is what most households pay for utilities and cellphone bills, the study found. Although higher-income folks tend to spend more on health care in absolute terms than people with less income, families on the lower end of the economic spectrum are forced to earmark a greater proportion of the household budget for out-of-pocket spending and face a more significant financial burden from such costs, says Fiona Greig, director of consumer research for the JPMorgan Chase Institute.

But the out-of-pocket news may be even worse when a couple of caveats from the report are factored in. The first is that about 8 percent of the U.S. population does not have a bank account, a segment that tends to include foreign-born or lower-income U.S. residents. The second is that the study wasn’t set up to identify all forms of payment, such as cash, paper check or health savings accounts. Translation: Those families may be spending far more than 9 percent of their income on health care.

The study, published in September, analyzed the spending of 2.3 million anonymized “core Chase customers” to understand more about their out-of-pocket health care costs, says Greig. It included payments with a credit card, debit card or electronic bill pay by people ages 18 to 64 who had at least $5,000 of annual income and withdrew from their accounts at least five times a month. The Chase customer sample, Greig says, was then weighted to better mirror the income and age distribution of the population. The findings showed that “the need and the spend are very concentrated among certain families,” Greig says. “It’s also very sticky from year to year.”

Since 2013, out-of-pocket health care costs have increased by an average annual rate of 4.3 percent, the Chase study found. And the number of families spending at least $5,000 on premiums and out-of-pocket expenses jumped to 24 percent in 2016 — up from 18 percent in 2005, according to a 2016 Commonwealth Fund survey. “Our health care system can do so much for people who are very sick,” says Paul Ginsburg, director of the Center for Health Policy at the Brookings Institution. “Spending is going to be very high because the myriad of treatments available to help cure or manage illnesses drives the cost up.”

Annette is cancer-free and Chrissy is in remission, but Troy’s lymphoma has returned. He and his daughter still require regular checkups, scans and surgeries, which keeps the bills rolling in. Chrissy’s GoFundMe has collected almost $96,000 of her family’s $120,000 goal. “We have been flooded with angels — there’s really no other way to say it,” notes Annette, who says she still has PTSD-like symptoms when opening bills. “People are phenomenal, and they bring tears to your eyes every day, and we’re hoping to pay it forward in any way we can.”


Numbers and factoids — fodder for your next cocktail party.