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U of M study: Recession led to a decline in out-of-pocket spending for children with special health care needs

A new University of Minnesota study shows that the recession of 2007 to 2009 led to a decline in out-of-pocket spending for privately insured children with special health care needs. Using data from the nationally representative Medical Expenditure Panel Survey, researchers also found that children without such needs were not affected by the recession. However, all adults in those children’s families had significantly lower out-of-pocket spending during the recession. This finding suggests that parents may reduce their personal medical care during difficult economic times to meet their children’s health care needs.

The analysis, “Recession Led To A Decline In Out-Of-Pocket Spending For Children With Special Health Care Needs” appears in the June issue of Health Affairs, and was led by Pinar Karaca-Mandic, Ph.D., assistant professor in the University of Minnesota School of Public Health.

“We wanted to find out if adults’ and children’s patterns of health care spending looked different” said Karaca-Mandic. “Although most children are relatively healthy, forgoing routine health care could have long-term adverse implications for children’s health.”

More specifically, children with special health care needs who require specialized services are at risk of adverse outcomes if they do not receive adequate care. Study findings showed that spending for children with special needs had increased over time before the recession but decreased during the recession.

“The health care services that seemed to be the most affected by the recession were dental services and prescription drugs,” said Karaca-Mandic.

The study results will likely have two major implications for policy makers:

  1. The Affordable Care Act includes many provisions that are aimed to reduce the financial challenges that families with children are facing. For instance, the Medicaid expansion in 2014 and cost-sharing subsidies for health plans purchased through new insurance exchanges are likely to reduce the out-of-pocket burden on privately insured families, especially those with lower incomes.
  1. Children’s Health Insurance Program (CHIP) also supports low and middle income families with children by providing more limited cost sharing than private insurance. However, CHIP is funded only through 2015 and its future is uncertain. This study suggests that children with special health care needs may be vulnerable during times of economic downturn. The defunding or elimination of CHIP could exacerbate such problems in the future.

“Policy efforts to bolster coverage for families with children are needed to protect the health care use of both children and parents during times of economic hardship,” concluded Karaca-Mandic.

Other study collaborators included Sung Choi Yoo, a doctoral student at the University of Minnesota School of Public Health, Division of Health Policy and Management, and Benjamin Sommers, M.D., Ph.D., assistant professor of health policy and economics at the Harvard School of Public Health and assistant professor of medicine at Brigham & Women’s Hospital and Harvard Medical School.

Read more about the study in the St. Paul Pioneer Press and Minnesota Public Radio.

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