• Defining out-of-pocket medical care spending as some percentage of family income. As discussed in Chapter 2, we decided to rely on multiples of the SPM poverty threshold for assessing the effects of MCER, rather than to measure affordability as a percentage of income and other resources.
  • Geographic variation in out-of-pocket medical care spending due to variation in both prices and quantities. The panel has not made any recommendations on geographic variation. The original poverty measure has the same set of thresholds nationwide. The SPM varies the thresholds geographically by differences in housing costs. However, given both the unsettled issue about geographical variation in health expenditures generally and in terms of how payments for Medicare in particular should or do vary, we think a decision to introduce geographic variation into the MCER should wait for results from both the current Institute of Medicine studies on geographic variation and adjustment.10
  • Underspending by uninsured and inadequately insured people. As discussed in Chapter 2, this proposed measure looks only at financial risk, not the health risks and broader implications for family well-being of forgone health care as a result of inadequate coverage.
  • Predicting the impact of different insurance plans on out-of-pocket medical care spending and total spending. Available data do not support detailed analysis of the effects of various types of insurance coverage on medical spending by families and individuals, although it would be desirable to model these effects so that the impact of changes in coverage could be assessed.

If it were possible to obtain the necessary data on insurance plan details, it would be desirable to model the effects of changes in those details—for example, when premiums rise and to the extent that families have to pay for part or all of their premiums out-of-pocket, their medical care economic burden increases; if there is a move to a high deductible plan, the risk from out-of-pocket expenditures may increase. It would also be desirable to model the effects of changes in copays, coinsurance, and stop-losses (out-of-pocket maxima) on families’ share of costs or limits on covered benefits. When a family’s share declines, other things being equal, its burden and risk would decrease except that members may have incentives to obtain more care of

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10 IOM Committee on Geographic Adjustment Factors in Medicare Payment (see http://www.iom.edu/Activities/HealthServices/GeographicAdjustments.aspx) and Committee on Geographic Variation in Health Care Spending and Promotion of High-Value Care (see http://www.iom.edu/Activities/HealthServices/GeographicVariation.aspx).



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