expenditures; how to combine distributions of expenditures for individual family members into the family’s distribution around its expected amount; and the pros and cons of regression methods versus cell-based approaches.

All of these topics require detailed information, not all of which is currently available. Moreover, in the absence of sufficient research on the distribution of out-of-pocket costs relative to SPM thresholds, it will be necessary to do that work empirically. For example, one would expect that a working poor family with one or more members in fair or poor health might have a substantial risk even without a hospitalization or high-cost drug regimen. An emergency department visit or a flare-up of a chronic condition might be enough to drop such a family below the threshold. For a middle-income family, however, it might take a larger health shock such as an uncovered hospital stay.

Recommendation 4-1: Given what limited work has been done in the field on issues in measuring medical care economic risk (MCER) prospectively, the panel recommends that appropriate federal agencies— the Agency for Healthcare Research and Quality, the Office of the Assistant Secretary for Planning and Evaluation, or both—perform a series of analyses using the Medical Expenditure Panel Survey to examine different prospective MCER measures.

Recommendation 4-2: The panel recommends that the results of the analyses from Recommendation 4-1 be used to inform the move from a purely retrospective approach based on burden to a more prospective approach for measuring medical care economic risk.

Data Sources for Developing and Producing an MCER

The data requirements for developing a measure of medical care economic risk are not the same as the requirements for producing a measure on a recurring basis. Development has more extensive data needs than production, but production requires annual data that are available on a timely basis from a large federal sample survey that represents the civilian noninstitutionalized population.

To develop a prospective measure of MCER requires longitudinal data, so that medical expenditures (and resources) observed prospectively over the course of a period—ideally a year—can be related to characteristics observed at the start of that period that are potentially predictive of medical expenditures. Actual out-of-pocket expenditures for premiums and other medical care expenses in the prior year may be the strongest predictor of expenditures during the current year, and although they are not a baseline characteristic per se, these expenditures ought to be included in the devel-

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