Introduction

Paying for health care has become increasingly burdensome for American families. As the cost of health care services has mounted, more and more health care costs have been shifted to consumers, who must cope with rising deductibles and higher copayments and co-insurance.

To relieve consumers of some of this financial burden, the Patient Protection and Affordable Care Act (Affordable Care Act) places caps on how much money insured people will have to spend out of their own pockets for health care services that are covered in the new law’s essential benefits package. These caps on out-of-pocket health care spending will go into effect in 2014, when millions of Americans begin to purchase coverage in the new health insurance exchanges. The out-of-pocket spending caps will follow a sliding scale: Those with lower and middle incomes will pay less out of pocket than those with higher incomes. The new caps guarantee that consumers will not have to pay more than a set amount annually in out-of-pocket expenses for these covered services.

These new protections will obviously help those who are fighting expensive chronic illnesses, but they will benefit many others as well. While family health care spending remains low when people are healthy, every year, thousands of Americans receive new diagnoses for expensive conditions, such as heart disease, cancer, diabetes, and asthma. And every year, thousands of others suffer serious, unexpected injuries and illnesses. Such unpredictable events can drive up family health care costs dramatically. As a result, over time, many American families will benefit from these new caps.

Families USA commissioned The Lewin Group to analyze health care spending and determine how many Americans are in families that will have out-of-pocket spending that exceeds these new caps, and by how much. We asked The Lewin Group to base their estimate on expected patterns of health care spending for 2011.

We estimate that, in 2011 alone, nearly 15.0 million Americans are in families that will spend more out of pocket than these new caps for services that are included in the Affordable Care Act’s essential benefits package. The total amount by which this out-of-pocket spending is estimated to exceed the caps is $24.7 billion. These new out-of-pocket caps will protect families from catastrophic medical costs when illness or accident strikes.

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