Politicians and pundits like to pontificate about the burden of health care costs and especially out-of-pocket costs. But is it a wide-spread problem? Not as much as you may think.
Chances are that you will go for many years spending very little on health care and even if you have a bad year, for most people it will not be an annual occurrence. This is especially true for the pre-Medicare population. Look at the information below. In any given year half the population has very little or no health care expenses.
The Agency for Healthcare Research and Quality (AHRQ) has updated its estimate of the concentration of medical expenditures, previously reported as of 1996. In 2012:
Total medical spending was $1.35 trillion;
One percent of people accounted for 22.7 percent of total health expenditures, with an annual mean expenditure of $97,956;
Five percent of people accounted for 50.0 percent of the total, with an annual mean expenditure of $43,058;
Ten percent of people accounted for 66.0 of the total, with a mean annual expenditure of $28,468;
Fifty percent of people accounted for 97.7 percent of the total; and
Fifty percent of the people accounted for only 2.3 percent of the total.
Source: health policy blog
Of course there are exceptions. Individuals with chronic conditions will have ongoing out-of-pocket costs. However, in my decades managing health plans, I found that many people overestimate their health care financial risk and as a result pay for more health insurance than they need. A monthly premium is a guaranteed expenses. Trading a lower premium for possible higher self-paid expenses is a risk that can be managed by most people and often to their advantage.