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The Hidden Costs of U.S. Health Care for Consumers: A Comprehensive Analysis


  • Consumers are concerned about health-related costs and are acting to avoid higher exposure. Among the hardest-hit consumers are those with medical problems, seniors, and those caring for others. Consumers need help managing health care costs.
  • Out-of-pocket (OOP) direct costs for health care products and services are a substantial and increasing burden in the average household. Financial tools designed to assist consumers in managing their health care costs must be personalized and easy to use at the point when decisions are made.
  • Consumer price sensitivity about providers, prescription drugs, and health insurance plans is likely to increase as costs continue to rise. Stakeholders cannot ignore OOP consumer costs.
  • Some OOP costs are the result of consumers' discretionary choices to spend some of their health care dollars on products and services outside the traditional confines of the health care sector. The extent of consumer discretionary costs in non-traditional health-related services is noteworthy.
  • As more discretionary dollars are spent on health care, fewer are available for other sectors of the economy, including financial services. At a basic level, this means that there is less cash available for servicing existing debt or for taking on new debt, which implies that future demand for consumer credit might be limited. Medical costs are increasingly implicated in consumers' credit problems.
  • There are also significant opportunities for health-related financial product innovations, whether by linking payments directly to services or in health-linked savings and insurance plans.
  • Consumer health care costs identified in this study reflect a broader range of goods and services than those traditionally considered in national reporting. In addition to identifying the depth and breadth of consumer costs in health-related services, this study illuminates how consumers are deciding to use their health care dollars, including their considerable interest in products and services outside the traditional confines of the health care sector. Our telephone survey results suggested that consumers are faced with difficult choices, such as paying for health care or paying for other living expenses, and that some devote a considerable proportion of their budget to paying for health care.
  • Study findings suggest that there is growing awareness, and increasing use, of alternative and over-the-counter products. Our telephone survey confirms an openness to using generic medicines to save money. This reflects a growing consumer interest in managing personal health, not necessarily within the confines of the traditional health care sector. This study also identifies a high level of interest in functional foods (food fortified with added or concentrated ingredients to a functional level, intended to improve health and/or performance), over-the-counter products, and a wide-variety of CAM products and services. Our telephone survey reveals that consumers are interested in using alternatives such as self-monitoring technologies and retail clinics to save money.

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