Lowering the Cost of Care / Reducing Total Out of Pocket Cost

Indicator: Total Out-of-Pocket Cost (Individuals) and Total Out-of-Pocket Cost (Families), California

Indicator Description: Indicators are from the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) administered by the United States Census Bureau and harmonized into IPUMS CPS by the Minnesota Population Center and collaborators.

Indicator measures the average out-of-pocket cost associated with health care over the last calendar year. For both Individuals and Families, out-of-pocket costs include expenses for health care copays, health insurance deductibles, and co-insurance for services and prescription drugs. They do not include over-the-counter medications.

Out-of-Pocket Costs (Families) additionally includes family expenses for health insurance plan premiums. Note that the definition of out-of-pocket spending sometimes excludes premiums. “Family” is defined at the health insurance unit, which includes one or more individuals in a household who would likely be considered a family unit in determining eligibility for private or public coverage.

Because the calculation for Out-of-Pocket Costs (Individuals) does not include insurance premiums, while Out-of-Pocket Costs (Families) does, the values should not be compared to each other.

Data Limitations: Costs in dollars are not adjusted for inflation.

Indicator Source: IPUMS CPS, University of Minnesota, www.ipums.org.

Data Sharing Agreement: Data are publicly available at https://cps.ipums.org/cps/

Indicator Calculation Methodology: This variable is the average reported out-of-pocket costs for Individuals and Families during the past calendar year. The indicator was computed using both harmonized and unharmonized IPUMS CPS variables. Out-of-Pocket Costs (Families) were estimated at the health insurance unit (HIU) level by summing individual costs across the HIU. The indicator was computed using IPUMS variables UH_PHIPVAL2_A1 and UH_PMEDVAL_A1. Primary health insurance coverage was assigned based on health insurance variables available in IPUMS CPS using the State Health Access Data Assistance Center (SHADAC) primary source of coverage hierarchy (see https://www.shadac.org/Insurance_Coverage_Hierarchy_2020).

Data Collection Methodology: Retrospective national survey conducted by mail, online, and phone survey methods using a geographically stratified sample design. Estimates are weighted to conform to estimates from the Census Bureau Population Estimate Program.

Program URL Link: https://www.census.gov/programs-surveys/saipe/guidance/model-input-data/cpsasec.html

Reporting Cycle: Annual (December)

1. Amin, K., Cox, C., Ortaliza, J. & Wager, E. (May 28 2024). Health Care Costs and Affordability. In Altman, Drew (Editor), Health Policy 101. https://www.kff.org/health-policy-101-health-care-costs-and-affordability/. Accessed May 20, 2025.

2. LaFontaine, P. & Spinner, D. S. (2021). United States Healthcare System Overview. ISPOR—The Professional Society for Health Economics and Outcomes Research. Accessed May 20, 2025. https://www.ispor.org/heor-resources/more-heor-resources/us-healthcare-system-overview.

3. Yagi, B. F., Luster, J. E., Scherer, A. M., Farron, M. R., Smith, J. E., & Tipirneni, R. (2021). Association of health insurance literacy with health care utilization: A systematic review. Journal of General Internal Medicine, 37, 375-389. https://doi.org/10.1007/s11606-021-06819-0.

4. Lukanen, E., Hest, R., & Turner, K. (2023). Defining families for studies of health insurance coverage. State Health Access Data Assistance Center Policy Brief. https://shadac-pdf-files.s3.us-east-2.amazonaws.com/s3fs-public/publications/2023%20Defining%20families%20brief.pdf.

5. California Health Care Foundation. (2023, August). National Health Spending: Use of Services Increases. California Health Care Almanac. https://www.chcf.org/publication/2023-edition-health-care-costs-101/

6. Kaiser Family Foundation. (2023, October). Employer Health Benefits: 2023 annual survey. Kaiser Family Foundation. https://www.kff.org/health-costs/report/2023-employer-health-benefits-survey/

7. Whisk, L. E., & Witt, W. P. (2012). Predictors of delayed or forgone needed health care for families with children. Pediatrics, 130(6), 1027-1037. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3507252/

8. Riggs, K. R., Buttorff, C., & Alexander, G. C. (2014). Impact of out-of-pocket spending caps on financial burden of those with group health insurance. J Gen Intern Med, 30(5), 683-688. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4395601/

9. Golberstein, E., Gonzales, G., & Sommers, B. D. (2015). California’s early ACA expansion increased coverage and reduced out-of-pocket spending for the state’s low-income population. Health Affairs, 34(10), 1688-1694. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4769999/

10. SHADAC analysis of the Current Population Survey’s Annual Social and Economic Supplements (CPS) public use microdata files, State Health Compare, SHADAC, University of Minnesota, statehealthcompare.shadac.org. Accessed May 19, 2025.

11. Ziller, E. C., Lenardson, J. D., & Coburn, A. F. (2015). Out-of-pocket spending among rural Medicare beneficiaries. Maine Rural Health Research Center, Working Paper #60. https://muskie.usm.maine.edu/Publications/rural/Medicare-out-of-pocket.pdf