Affordability of the Health Expenditures of Insured Americans Before the Affordable Care Act

Central to the Affordable Care Act is the notion of affordability and the role of health insurance in making otherwise unaffordable health care affordable. We used data from the 1996 to 2008 versions of the Medical Expenditure Panel Survey to estimate the portion of overall health care expenditures by insured respondents that would otherwise have been beyond their disposable incomes and assets. We found that about one third of insured expenditures would have been unaffordable, with a much higher percentage among publicly insured individuals. This result suggests that one of the main functions of insurance is to cover expenses that insured individuals would not otherwise be able to afford.Central to the Affordable Care Act (ACA; Pub L No. 111–148) is the notion of affordability and the role of health insurance in making otherwise unaffordable health care affordable. Yet, to our knowledge, no reports in the health policy literature have estimated the extent to which insurance accomplishes this function. We used data from the 1996 to 2008 versions of the Medical Expenditure Panel Survey (MEPS) to estimate the portion of total health care expenditures by insured respondents that would have been beyond their disposable income and assets if they had been uninsured. We focused on the pre-ACA period because that period represents the political context in which the act was passed.The MEPS data include information on demographic characteristics, medical care expenditures, health insurance coverage, incomes, and assets among a representative sample of US households. The information used in our analysis was derived from the household component of the MEPS, which is limited to members of the civilian, noninstitutionalized population who were present in the household during the entire survey period. We employed the restricted-use version of the MEPS to gain access to information on respondents’ assets.