Out of Pocket Healthcare Spending 2011

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This report, Out of Pocket Healthcare 2011 focuses on those costs of health care which are not paid for by government or private insurance. Once a small percentage of costs of the health care system, the percentage borne by the consumer is increasing steadily.

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Out of Pocket Healthcare Spending 2011

  1. 1. Out of Pocket Healthcare Spending 2011Published: April 2011No. of Pages: 85Price: $ 1995The costs of health care products and services continue to rise briskly, significantlyoutpacing currently low inflation rates. According to the U.S. Department of Labor, theaverage households spending on health care after inflation has been rising by about 1.4%each year. Retirees have been particularly hard hit, with inflation-adjusted out-of-pocketcosts rising by more than 2% each year as a result of increased spending on prescriptiondrugs.While insurance is the most common form of payment for healthcare services, increasinglycustomers are paying for their own expenses. Pharmaceutical, device and diagnosticcompanies, should recognize that a part of their revenues are originating directly orindirectly from out of pocket expenditures. Unique financial services have been created tofacilitate non-insurance-paid health care services, and more are expected to be created inthe near term.This report,Out of Pocket Healthcare Spending 2011 focuses on those costs of healthcare which are not paid for by government or private insurance. Once a small percentage ofcosts of the health care system, the percentage borne by the consumer is increasingsteadily. Included in the report is:• Estimates of the Current Out of Pocket Healthcare Spending Market and Forecasts to2015.• Breakdown of Spending by Type (Elective, Hospital, Emergency Room, Dental, VisionOutpatient, Prescription Drugs, Office Based Visit, Other)• Health Care Reform and Its Impact on Out of Pocket Spending• Statistics For the Types of Consumers Most Likely to Pay Out of Pocket• Drivers of the Out of Pocket Trend and Potential Limiters• Overview of the U.S. Healthcare System, Insured and Uninsured Population.• The Types of Services and Products Purchased with Out of Pocket dollars• Overview of the growing Healthcare Finance market and a look at key competitors.
  2. 2. The economic recession of December 2007 to October 2009 represented a major downturnthat led to broad-based cost-cutting, rising unemployment and reduced disposable income.The impact of the pullback - which some experts compared to the Great Depression of 1929to 1934 - cannot be overstated. Kalorama Information looks at what change has resulted inout of pocket expenditure for healthcare as a result of the recession and weak recovery.As part of Kalorama Informations trusted process, secondary research from government,medical and industry sources was utilized along with interviews with industry experts in thehealthcare finance industry.In Weak Recovery, Consumers Bearing More of Healthcare CostsHealthcare costs paid out-of-pocket by consumers have increased steadily in recent years,but according to Kalorama Information, the recession and weak recovery are additionaldrivers for the trend. In fact, the independent healthcare market research firm has found inits new report, Out of Pocket Healthcare Spending 2011, that out-of-pocket healthcarespending was $303 billion in 2010 and the rate of growth will accelerate at 8% annually inthe coming years.According to the U.S. Department of Labor, the average households inflation-adjustedspending on healthcare has been rising by about 1.4% each year. Retirees have beenparticularly hard hit, with inflation-adjusted out-of-pocket healthcare costs rising by morethan 2% each year as a result of increased spending on prescription drugs."The recent recession brought with it a high unemployment rate, exacerbated by increasedoutsourcing of jobs to lower cost countries, broad-based cost-cutting and reduceddisposable income," said Bruce Carlson, publisher of Kalorama Information. "Meanwhile,affordable healthcare has become less available but more necessary."The costs of healthcare products and services continue to rise briskly; in some cases, theyhave become astronomical. For example, in 2010, average annual healthcare premiums fora family of four ($13,770) approached annual earnings at the federal minimum wage($14,500). As a result, Kalorama notes that managed care organizations are increasinglyshifting the burden of healthcare costs to consumers by way of increased co-pays andpremiums.About 70% of consumers out-of-pocket healthcare spending goes to premiums. And this isincreasing as HMOs and employers engage in cost shifting. Co-pays make up a little over3% of spending, which Kalorama also expects to increase due to cost shifting. Another 27%of out-of-pocket spending goes to direct payments.The Health Care Reform of 2010 has significantly changed the landscape of the U.S.healthcare industry by extending healthcare coverage to approximately 32 million previouslyuninsured people. Although this could potentially decrease some demand for out-of-pocket
  3. 3. spending from the previously uninsured, it may in fact, raise awareness of the value of basiccare and bring more persons into the medical system, thus potentially increasing spendingas newly insured consumers take a renewed interest in their health and wellness.TABLE OF CONTENTSCHAPTER ONE: EXECUTIVE SUMMARYHealth Care ReformImpact of the EconomyOut of Pocket Cost DriversHealthcare InflationCost ShiftingRetail ClinicsOut of Pocket Cost LimitersDisease Management ProgramsPart DGenericsOTC ProductsWhere Out of Pocket Dollars are SpentCHAPTER TWO: THE STATE OF OUT OF POCKET HEALTHCARE SPENDING IN 2011Types of ExpendituresInsurance Co-PaymentsDirect PaymentsPremiums and Plan FeesCash or CheckCredit CardsLoans and Lines of CreditFlexible Spending AccountsHealth Savings AccountsMedical FinancingAmount FinancedNon-Elective Procedures and Prescription DrugsDistribution of Out-of-Pocket Spending on Non-Elective Procedures (Hospital, EmergencyRoom, Dental, Vision Outpatient, Prescription Drugs, Office Based Visit, Other)Consumers Who Pay Out of PocketThe Uninsured and UnderinsuredMedicaid RecipientsThe DisabledSenior CitizensThe Mentally IllThe ObesePersons with Chronic ConditionsHealthcare Finance CompetitorsReliance Medical FinancePFSMed DirectMedChoice Financial
  4. 4. E-Financing SolutionsCSI Financial ServicesCredit MedicalCare CreditCapitol One Healthcare FinanceCHAPTER THREE: OUT-OF-POCKET EXPENDITURES FORECAST TO 2015Out-of-pocket Expenditure Growth DriversHealthcare InflationManaged Care Cost ShiftingRetail ClinicsOut-of-Pocket Expenditure Growth ConstraintsDisease Management ProgramsPart DGeneric DrugsRx-to-OTC SwitchesForecastsExpenditures by Type (Credit Card, Cash, Loans, Healthcare Financing Programs,HSA)Payment MethodsAmount FinancedConsumers Who Pay Out-of-Pocket (Uninsured and Underinsured, Medicaid, Disabled,Senior Citizens, Mentally Ill, Obese, Persons With Chronic Conditions.)More Prescription Drugs Reports by Kalorama InformationThe Market for Rx to OTC Switches by Kalorama InformationWhile many areas of the pharmaceutical industry will suffer from current economicconditions worldwide, sales of over-the-counter drugs are widely anticipated to grow asconsumers ...The Worldwide Market for Prescription Dermatological Drugs, 7th Edition by KaloramaInformationThis Kalorama Information report, Worldwide Market for Prescription Dermatological Drugsdetails the various categories of prescription dermatological drugs, describes the globalmarket and identifies major ...The Worldwide Market for Anti-Infectives (Antifungals, Antibacterials and Antivirals) byKalorama InformationThe anti-infective market is at a critical juncture. For the past 60 years, antibiotic drugshave turned bacterial infections into treatable conditions rather thanThe Market for Wellness Programs and Their Impact on Pharmaceutical, Diagnostic andDevice Product Markets by Kalorama InformationAt their most basic level, wellness programs represent an attempt to encourage good healthand thereby decrease utilization of health care products and services.Rx to OTC Switches 2009 by Kalorama InformationWhile many areas of the pharmaceutical industry will suffer from current economicconditions worldwide, sales of over the counter drugs are widely anticipated to grow .
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