Name: Out-of-Pocket Spending in Healthcare (Pharmaceuticals, Surgeries, Tests, Electives, Premiums, Copays, Doctor Visits, Other), 6th Edition
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Description

A variety of demographic, business, and government trends are contributing to rising out-of-pocket (OOP) healthcare expenses in the United States. Out-of-Pocket Healthcare Expenditures in the United States, 6th Edition examines these trends in detail, focusing on the financial aspects of OOP spending growth and quantifying the growth of OOP spending with forecasts of total expenditures and specialized healthcare financing.

Total Expenditures

The report examines past, current, and future levels of U.S. out-of-pocket healthcare expenditures both in total and as specific sub-groups (by type, by payment method, by elective vs. non-elective). Through the next five years, total consumer out-of-pocket expenditures for healthcare are expected to continue rising, with trends established over the past several years continuing through the foreseeable future. While the Covid pandemic of 2020 and 2021 caused a temporary pullback in consumer out-of-pocket healthcare spending, the historic trend resumed in 2022 and is expected to continue through the five year forecast period of this report.

The report presents the following data points:

Growth of Consumer Out-of-Pocket Expenditures 2018-2028, in $ Billion
How Consumer Out-of-Pocket Expenses Are Financed in 2022 (%) (Credit Cards, Cash or Check, FSAs, Loans or Lines of Credit, Healthcare Financing, HSAs)
Consumer Out-of-Pocket Expenditures Paid with Specialized Healthcare Financing 2018-2028, in $ Billion

Types and Amounts of Expenses Financed

In 2023, U.S. consumers financed many different types of healthcare expenses. These can broadly be grouped into two categories: elective procedures including over-the-counter (OTC) medications and non-elective procedures including prescription drugs. These types of procedures are distinct, and discussed separately within the report.

Elective procedures are those that are not strictly necessary to address a medical condition. They are thus not covered by medical insurance and their utilization is discretionary on the part of the consumer. The amount of non-elective healthcare and prescription drug expenses financed by individual consumers varies widely, although a very large proportion of consumers must finance some expenditures. The report provides the following data:

Methods of Financing Elective Procedures, 2022 (Credit Cards, Cash or Check, Healthcare Financing Programs, Loans or Lines of Credit)
Average Share of Non-Elective Healthcare Expenses Paid Out-of-Pocket by Percentile of Total Health Spending, 2020
Average Share of Non-Elective Healthcare Expenses Paid Out-of-Pocket by Type of Service, 2020 (Hospital, Outpatient, Office Based Visit, Prescription Drugs, Emergency Room, Dental, Home Health, Vision, Other Health Care)
Distribution of Out-of-Pocket Healthcare Spending for the Average Person, 2020 (Hospital, Outpatient, Office Based Visit, Prescription Drugs, Emergency Room, Dental, Vision, Other Health Care)
Drug Cost Coverage by Payor Type (Public, Private, Cash) 1965, 1985, 2000, 2005, 2010, 2020

Consumers Who Pay Out-Of-Pocket

Consumers from all socioeconomic groups are facing high out-of-pocket expenditures for healthcare. Certain groups are more vulnerable than others to having trouble paying their medical bills and represent a larger proportion of this spending. These include the uninsured and underinsured, Medicaid recipients, disabled persons, senior citizens, the mentally ill, obese persons, people suffering from drug or alcohol addiction, persons with chronic medical conditions. Out-of-Pocket Healthcare Expenditures in the United States, 6th Edition provides the following related information:

Size of High Risk Groups for Out-of-Pocket Healthcare Expenditures, 2018-2028, in Millions of Persons (The Uninsured & Under-insured, Medicaid Recipients, The Disabled, Senior Citizens, The Mentally Ill, The Obese, Persons with Drug or Alcohol Addictions, Persons with Chronic Conditions)
Comparative Sizes of High Risk Groups for Out-of-Pocket Healthcare Expenditures, 2018-2028, in Millions of Persons (The Uninsured & Under-insured, Medicaid Recipients, The Disabled, Senior Citizens, The Mentally Ill, The Obese, Persons with Drug or Alcohol Addictions, Persons with Chronic Conditions)
Proportion of Adults under Age 65 with Chronic Conditions, 2023 (Privately Insured, Medicare or Medicaid, Uninsured, Other)

Expenditures by Type, Payment Methods, Elective vs. Non-Elective Procedures

Consumers in the United States utilize a variety of methods to pay for healthcare products and services, required in instances when payment is not made directly from a healthcare plan to the provider. The report examines expenditure by type, including direct payments and co-pays, and illustrates that the amount of out-of-pocket expenditures financed by consumers in the coming years will vary considerably between elective and non-elective procedures. Featured data include:

Change in Consumer Out-of-Pocket Expenditures by Type 2018-2028, in $ Billion (Direct Payments, Co-pays, Total, Change [%])
Proportion of Consumer Out-of-Pocket Spending by Type of Healthcare Expenditure, 2015, 2020, 2025 (Direct Payments, Co-pays)
Change in Consumer Out-of-Pocket Expenditure by Payment Type, 2018-2028, in $ Billion (Credit Cards, Cash or Check, FSAs, Loans or Lines of Credit, Healthcare Financing Programs, HSAs, Total, Change [%])
Proportion of Consumer Out-of-Pocket Expenditures by Payment Type, 2018, 2023, 2028 (Credit Cards, Cash or Check, FSAs, Loans or Lines of Credit, Healthcare Financing Programs, HSAs)
Growth of Consumer Out-of-Pocket Expenditures for Elective vs. Non-Elective Procedures, 2018-2028, in $ Billion (Elective, Non-Elective)
Change in Consumer Out-of-Pocket Expenditures for Elective Procedures That Are Financed, by Payment Type, 2018-2028, in $ Billion (Paid by Cash or Check, Financed, Total, Change [%])
Proportion of Consumer Out-of-Pocket Spending for Elective Procedures That Are Financed (All Methods), 2018, 2023, 2028 (Paid by Cash or Check, Financed)
Change in Amount of Consumer Out-of-Pocket Expenditures for Non-Elective Procedures That Are Financed, 2018-2028, in $ Billion (Paid by Cash or Check, Financed, Total, Change [%])
Proportion of Consumer Out-of-Pocket Spending for Non-Elective Procedures That Are Financed (All Methods), 2018, 2023, 2028 (Paid by Cash or Check, Financed)
Distribution of Out-of-Pocket Spending on Non-Elective Procedures for the Average Person, 2017 (Ill-defined conditions, Circulatory, Musculoskeletal, Respiratory, Endocrine, Nervous system, Cancers, Injury, Genitourinary, Digestive, Mental Illness, Other, Infectious diseases, Pregnancy and childbirth, Dermatological)

Market Drivers and Restraints

The strong growth in U.S. out-of-pocket spending is the result of a preponderance of market drivers, which are mitigated by relatively few market restraints. The report shows leading drivers and restraints of consumer out-of-pocket healthcare spending, in order of strength, across the market:

Drivers & Restraints of the Consumer Out-of-Pocket Spending Market
Drivers & Restraints of Direct Pay and Co-Pay Expenditures
Drivers & Restraints of Credit Cards, Cash/Check, FSA, Loan/Line of Credit, Healthcare Financing Program and HSA Expenditures
Drivers & Restraints of Elective Procedure Out-of-Pocket Expenditures
Drivers & Restraints of Non-Elective Procedure Out-of-Pocket Expenditures
Drivers & Restraints of Specialized Healthcare Financing
Drivers & Restraints of Specialized Healthcare Financing for Elective Procedures
Drivers & Restraints of Specialized Healthcare Financing for Non-Elective Procedures

Company Profiles

A large number of companies help consumers pay their out-of-pocket medical expenses and/or significantly influence those expenses. Most companies that provide patient financing focus on funding elective procedures, with a smaller number offering financing for non-elective therapies and providing other financial services. While companies participating in the credit card, and lines/lines of credit segment are numerous and do not specialize in healthcare products, the companies operating in the specialized healthcare financing are highly focused on financing medical and dental expenses. In general, the market is very dynamic, with many players entering and exiting. Out-of-Pocket Healthcare Expenditures in the United States, 6th Edition provides profiles of players in the market, noting history and lines of business, financial information, and relevant business operations. The companies profiled include:

Ally
Aurora Quick Care
CareCredit
CareSpot
ClearBalance
ClearGage
Concentra
Denefits
E-Financing Solutions
FastMed
Lending Club Patient Solutions
LendingUSA
MinuteClinic
NextCare
PatientFi
Prosper Healthcare Lending
RediClinic/Rite Aid Virtual Care
SimpleSelect Patient Finance
Wells Fargo

Chapter 1: Executive Summary

Out-of-Pocket Expenditures in the U.S. Healthcare Industry

Scope and Methodology

Out-of-Pocket Spending Summary

Figure 1-1: Consumer Out-of-Pocket Expenditures, 2018-2028 ($ Billion)
Table 1-1: Consumer Out-of-Pocket Spending Market Drivers and Restraints, 2023
Figure 1-2: How Consumer Out-of-Pocket Expenses Are Financed in 2022, by Type Used (Cash or Check, Credit Cards, FSAs, Health Care Financing Programs, HSAs, Loans or Lines of Credit) (%)
Figure 1-3: Consumer Out-of-Pocket Expenditures Paid with Specialized Healthcare Financing 2018-2028, ($ Billion)

Chapter 2: The U.S. Healthcare System in 2023

Healthcare System Overview

Background

Public Healthcare

Medicare

Medicaid

Veteran’s Administration

Children’s Health Insurance Program

Private Healthcare

Commercial Health Insurers

Blue Cross Blue Shield Plans

HMOs

Self-Funded Employee Health Plans

On Demand Healthcare

Urgent Care Centers

Retail Clinics

Other Healthcare Venues

Insufficient Focus on Wellness and Prevention

Cost Issues

U.S. Healthcare Spending

Table 2-1: Percent of U.S. National Healthcare Spending by Category (Hospital Care, Physician and Clinical Services, Prescription Drugs, Clinical Services, Nursing Care Facilities, Home Healthcare), 2021

Effects of Covid

U.S. Costs vs. Peer Country Costs

Figure 2-1: Percent of GDP Spent on Health by OECD Member, 1980-2021

High Cost Variation by City and Venue

Healthcare Inflation

Managed Care Cost Shifting

Effects on Consumers

Balance Bills

No Surprises Act of 2020

Prior Plan Approval

Staffing Shortages

Physician Shortages

System Errors and Inefficiencies

The Effect of the Economy

Table 2-2: Key U.S. Economic Strength Measures, April 2023 vs. April 2022

Inflation

Widening Wage Gap

Reduced Savings Rate

Discontinued Stimulus Payments

Replacement of Workers by Technology

Forecasts

Disease Management and Wellness Programs

Regulation

Table 2-3: Selected U.S. Federal and State Healthcare Oversight Bodies, 2023

Reimbursement Challenges

MACRA and Value Based Reimbursement

Payment for Approved Assays

Consumer Healthcare Information

Consumer Information Online

DTC Ad Spending

Personal Health Records (PHRs)

Lower Cost Medications

Generic Drugs

Private-Label OTC Medications

Rx-to-OTC Switches

Affordable Care Act

Individual Mandate Repeal

Association Health Plans

Short Term Limited Duration Insurance (STLDI)

Impact of the ACA on Out-of-pocket Expenditures

Impact of Covid

Diagnostic Tests

Vaccines

Sick Care

Life Expectancy

Chapter 3: U.S. Out-of-Pocket Expenditures

Types of Expenditures

Insurance Co-Payments

Direct Payments

High Deductible Health Plans

Premiums and Plan Fees

Payment Methods

Cash, Check or Money Transfer

Credit Cards

Loans and Lines of Credit

Medical Financing

Flexible Spending Accounts

Health Savings Accounts

Types and Amounts of Expenses Financed

Elective Procedures and OTC Medications

Figure 3-1: Methods of Financing Elective Procedures, by Method (Cash or Check, Credit Cards, Healthcare Financing Programs, Loans or Lines of Credit), 2022 (%)

Non-Elective Procedures and Prescription Drugs

Figure 3- 2: Average Share of Non-Elective Healthcare Expenses Paid Out-of-Pocket by Percentile of Total Health Spending, 2020 (%)
Figure 3-3: Average Share of Non-Elective Healthcare Expenses Paid Out-of-Pocket by Type of Service (Dental, Emergency Room, Home Health, Hospital, Office Based Visit, Outpatient, Other Health Care, Prescription Drugs, Vision), 2020 (%)
Figure 3-4: Distribution of Out-of-Pocket Healthcare Spending for the Average U.S. Person, by Type (Dental, Emergency Room, Home Health, Hospital, Office Based Visit, Outpatient, Other Health Care, Prescription Drugs, Vision), 2020 (%)
Figure 3-5: Drug Cost Coverage, by Payor Type (Public, Private, Cash), 1965, 1985, 2000, 2005, 2010, 2020 (%)

Consumers Who Pay Out-Of-Pocket

Table 3-1: Size of High Risk Groups for Out-of-Pocket Healthcare Expenditures, (The Disabled, Medicaid Recipients, The Mentally Ill, Millennials, The Obese, Persons with Chronic Conditions, Persons with Drug or Alcohol Addictions, Senior Citizens, The Uninsured & Under-insured), 2018-2028 (Millions of Persons)
Figure 3-6: Comparative Sizes of High Risk Groups for Out-of-Pocket Healthcare Expenditures, by Group (The Disabled, Medicaid Recipients, The Mentally Ill, Millennials, The Obese, Persons with Chronic Conditions, Persons with Drug or Alcohol Addictions, Senior Citizens, The Uninsured & Under-insured), 2018–2028 (Millions of Persons)

The Uninsured and Underinsured

The Uninsured

Figure 3-7: Percentage Distribution of Working Age Adults Who Were Uninsured for One or More Years, by Age (19-34, 35-49, 50-64), Race (Black, Latino/Hispanic, White), Income (<200% FPL, 200% FPL+), Health Status (Sicker, Not Sticker) and Region (Northeast, Midwest, South, West), 2022 (%)

The Underinsured

Figure 3-8: Percentage Distribution of Working Age Adults Who Were Underinsured for One or More Years, by Income (<200% FPL, 200% FPL) and Health Status (Sicker, Not Sicker), 2022 (%)

Medicaid Recipients

The Disabled

Disabled Veterans

Millennials

Senior Citizens

The Mentally Ill

The Obese

Persons with Alcohol and Drug Addictions

Persons with Chronic Conditions

Figure 3-9: Proportion of Adults Under Age 65 With Chronic Conditions, by Insurance Type (Medicare or Medicaid, Privately Insured, Uninsured, Other), 2023 (%)

Chapter 4: Consumer Out-of-Pocket Spending Forecasts in the U.S.

Forecasts

Total Expenditures

Table 4-1: Consumer Out-of-Pocket Expenditures, 2018-2028 ($ Billion)
Figure 4-1: Growth of Consumer Out-of-Pocket Expenditures, 2018-2028 ($ Billion)

Drivers & Restraints

Figure 4-2: Drivers & Restraints of Consumer Out-of-Pocket Expenditures, 2023

Expenditures by Type

Table 4-2: Consumer Out-of-Pocket Expenditures, by Type (Co-Pays, Direct Payments), 2018-2028 ($ Billion)
Figure 4-3: Change in Consumer Out-of-Pocket Expenditures, by Type (Co-Pays, Direct Payments), 2018-2028 ($ Billion)
Figure 4-4: Proportion of Consumer Out-of-Pocket Spending, by Type of Healthcare Expenditure (Co-Pays, Direct Payments), 2018, 2023, 2028 (%)

Drivers & Restraints

Figure 4-5: Drivers & Restraints of Direct Pay and Co-Pay Expenditures, 2023

Payment Methods

Table 4-3: Consumer Out-of-Pocket Expenditure, by Payment Type (Cash or Check, Credit Cards, FSAs, Healthcare Financing Programs, HSAs, Loans or Lines of Credit), 2018-2028, ($ Billion)
Figure 4-6: Change in Consumer Out-of-Pocket Expenditure, by Payment Type (Cash or Check, Credit Cards, FSAs, Healthcare Financing Programs, HSAs, Loans or Lines of Credit), 2018-2028 ($ Billion)
Figure 4-7: Proportion of Consumer Out-of-Pocket Expenditures, by Payment Type (Cash or Check, Credit Cards, FSAs, Healthcare Financing Programs, HSAs, Loans or Lines of Credit), 2018, 2023, 2028 (%)

Drivers & Restraints

Figure 4-8: Drivers & Restraints of Credit Cards, Cash/Check, FSA, Loan/Line of Credit, Healthcare Financing Program and HSA Expenditures, 2023

Total Financing of Elective vs. Non-Elective Procedures

Table 4-4: Consumer Out-of-Pocket Expenditures for Elective vs. Non-Elective Procedures, 2018-2028 ($ Billion)
Figure 4-9: Growth of Consumer Out-of-Pocket Expenditures for Elective vs. Non-Elective Procedures, 2018-2028 ($ Billion)

Elective Procedures

Table 4-5: Consumer Out-of-Pocket Expenditures for Elective Procedures That Are Financed, by Payment Type (Paid by Cash or Check, Financed), 2018-2028 ($ Billion)
Figure 4-10: Change in Consumer Out-of-Pocket Expenditures for Elective Procedures, by Payment Type (Paid by Cash or Check, Financed), 2018-2028, ($ Billion)
Figure 4-11: Proportion of Consumer Out-of-Pocket Spending for Elective Procedures That Are Financed (All Methods), by Method (Paid by Cash or Check, Financed), 2018, 2023, 2028 (%)

Drivers & Restraints

Figure 4-12: Drivers & Restraints of Elective Procedure Out-of-Pocket Expenditures, 2023

Non-Elective Procedures

Table 4-6: Amount of Consumer Out-of-Pocket Expenditures for Non-Elective Procedures That Are Financed, by Payment Type (Paid by Cash or Check, Financed), 2018-2028 ($ Billion)
Figure 4-13: Change in Consumer Out-of-Pocket Expenditures for Non-Elective Procedures, by Payment Type (Paid by Cash or Check, Financed), 2018-2028 ($ Billion)
Figure 4-14: Proportion of Consumer Out-of-Pocket Spending for Non-Elective Procedures That Are Financed (All Methods), by Payment Type (Paid by Cash or Check, Financed), 2018, 2023, 2028 (%)
Figure 4-15: Distribution of Out-of-Pocket Spending on Non-Elective Procedures for the Average Person, by Procedure (Cancers and Tumors, Circulatory System, Dermatological, Digestive, Endocrine, Genitourinary, Ill Defined Conditions, Infectious Diseases, Injury and Poisoning, Mental Illness, Musculoskeletal, Nervous System, Pregnancy and Childbirth, Respiratory, Other), 2017 (%)

Drivers & Restraints

Figure 4-16: Drivers & Restraints of Non-Elective Procedure Out-of-Pocket Expenditures, 2023

Chapter 5: Specialized Healthcare Financing

Introduction

Patient Population

Improving Collections

Market Expansion

Customer Satisfaction

Types of Procedures Financed

Elective Procedures

Figure 5-1: Share of Medical Procedure Financing Market, by Major Segment (Chiropractic Services, Cosmetic Dentistry, Cosmetic Surgery, Fertility Treatment, Hair Restoration, Vision Correction, Weight Loss Surgery, Others), 2023

Cosmetic Surgery

Table 5-1: Cosmetic Surgical Procedures Offered in the U.S., by Type (Invasive, Minimally Invasive, Non-Invasive), 2023

Cosmetic Dentistry

Chiropractic Services

Fertility Treatments

Table 5-2: Fertility Treatments Offered in the U.S., 2023

Weight Loss Surgery

Table 5-3: Leading Weight Reduction Surgeries Offered in the U.S., 2023

Vision Correction

Hair Restoration

Other Procedures

Non-Elective Procedures

Types of Products

Costs to Consumers

Costs to Providers

Usage and Acceptance

Industry Exits

Chapter 6: Specialized Healthcare Financing Forecasts

Total Expenditures

Table 6-1: Consumer Out-of-Pocket Expenditures Paid with Specialized Healthcare Financing, 2018-2028 ($ Billion)
Figure 6-1: Growth of Consumer Out-of-Pocket Expenditures Paid with Specialized Healthcare Financing, 2018-2028 ($ Billion)

Drivers & Restraints

Figure 6-2: Drivers & Restraints of Specialized Healthcare Financing, 2023

Elective Procedures

Table 6-2: Segmentation of Selected Medical Finance Companies in the U.S., 2023
Table 6-3: Consumer Out-of-Pocket Elective Procedure Expenditures Paid with Specialized Healthcare Financing, 2018-2028 ($ Billion)
Figure 6-3: Growth of Consumer Out-of-Pocket Elective Procedure Expenditures Paid with Specialized Healthcare Financing, 2018-2028 ($ Billion)

Drivers & Restraints

Figure 6-4: Drivers & Restraints of Specialized Healthcare Financing for Elective Procedures, 2023

Non-Elective Procedures

Table 6-4: Consumer Out-of-Pocket Non-Elective Procedure Expenditures Paid with Specialized Healthcare Financing, 2018-2028 ($ Billion)
Figure 6-5: Growth of Consumer Out-of-Pocket Non-Elective Procedure Expenditures Paid with Specialized Healthcare Financing, 2018-2028 ($ Billion)

Drivers & Restraints

Figure 6-6: Drivers & Restraints of Specialized Healthcare Financing for Non-Elective Procedures, 2023

Key Players

Table 6-5: Leading Providers of Specialized Healthcare Financing, by Company (Ally, CareCredit, ClearBalance, ClearGage, GreenSky, Lending Club, Lending USA, Prosper Healthcare, Wells Fargo, Others), 2022 ($ Billion)
Figure 6-7: Market Positions of Leading Providers of Specialized Healthcare Financing, by Company (Ally, CareCredit, ClearBalance, ClearGage, GreenSky, Lending Club, Lending USA, Prosper Healthcare, Wells Fargo, Others), 2022 (%)

Chapter 7: Efforts to Contain Out-of-Pocket Spending

Introduction

Industry

Tele-Health

Mobile Health

Artificial Intelligence

Chatbots and ChatGPT

Future Applications

Consumer Education

Government

Federal Government

Inflation Reduction Act

State Governments

Premium Rate Review

Reference-Based Pricing

Cost Growth Benchmarks

Reblancing

CalAIM

Consumer Groups, Community Organizations and Others