A new study found that over a 4-year period, slightly more than a quarter of Americans experienced any financial strain related to health costs, a proportion far higher than previously reported.

The JAMA Internal Medicine study is the longest longitudinal investigation of how health spending affects Americans’ financial security.

Led by researchers from Harvard Medical School, the study examined a 4-year tranche of data from the federal Medical Expenditure Panel Surveys (MEPS) that became available for the first time in the wake of the COVID pandemic, lead author Adam Gaffney, MD, MPH, told Medscape Medical News.

MEPS data were previously only available for 2-year periods. The shorter timeframe does not give an accurate picture, as people may be healthy one year and sick the next, said Gaffney, assistant professor of medicine at Harvard Medical School, Boston, and a pulmonary and critical care medicine physician at Cambridge Health Alliance, Cambridge, Massachusetts.

Tracking people for a longer period allowed the researchers to portray spending more accurately, and it allowed them to document a cumulative effect — a mounting of costs over time, Gaffney said.

“In real life, people don’t have steady, predictable health costs — they experience sharp spikes in costs after an illness, a hospitalization, or a new diagnosis,” said Rishi Wadhera, MD, MPP, MPhil, cardiologist and associate professor of medicine at Harvard Medical School, who was not involved in the study. “This paper captures that reality in a way we don’t usually see.”

The 4-year estimate is “very useful for policy makers,” said Jessica S. Banthin, PhD, senior fellow in the Health Policy Center at the Urban Institute, Washington, DC. 

The 25% figure reported by the authors “shows how widespread this experience is,” Banthin told Medscape Medical News.

Previous cross-sectional studies — indicating that 11% of Americans experienced financial strain due to health costs in a given year — “captured merely the tip of the iceberg,” wrote John W. Scott, MD, MPH, of the University of Washington, Seattle, in an editorial accompanying the Gaffney study.

Chronic Disease, Death Associated With More Financial Strain

The authors measured “financial strain” in three ways. Cost burden was defined as out-of-pocket expenditures for an individual greater than 10% of family income, or greater than 5% for people with low incomes. Catastrophic cost burden was defined as greater than 40% of family income. The authors also included “foregone care,” a subjective measure based on MEPS participants stating that they had not gotten care because of cost. 

About 12% of the 12,645 respondents had any financial strain in the first year; that number rose to 26.7% by the end of the fourth year.

Overall, 4% of respondents said they spent more than 40% of their income on health in the first year — a figure that rose to 11% at the end of the 4 years. About 6% of adults said they had foregone care because of affordability in the first year, a figure that had doubled by the fourth year.

The nonelderly uninsured and individuals older than 64 years had higher rates of cost burden, as did adults with lower education levels. Financial strain increased for those who had a chronic condition, rising substantially with each additional condition. Those with one disease had a 35% increased risk for a cost burden, while those with three or more conditions had a 163% increased risk.

Death also was associated with cost burden and catastrophic cost burden. Overall, 45% of those who died in the fourth year of the study had spent more than 10% of family income on healthcare, while a third had spent more than 40% of income on care.

This finding is “particularly concerning,” said Wadhera.

Scott, in the editorial, wrote that it “adds to the growing body of evidence suggesting that financial hardship is not merely an unfortunate byproduct of illness but also a clinical risk factor that directly threatens patients’ health.”

Wadhera said the study “does not prove that high costs directly cause worse health, but we know from other research that financial stress leads people to delay care, skip medications, and experience real harm,” he said. “At a minimum, it shows that our system often adds financial suffering on top of medical suffering near the end of life.”

Gaffney agreed. “The system is failing to protect us at our most vulnerable times,” Gaffney told Medscape Medical News.

Figures Likely an Underestimate

The researchers did not include insurance premium costs (because MEPS only assesses them for private plans) or costs for institutionalized Americans in their estimates. 

Both would increase burden estimates, said Gaffney. “We view our estimates as conservative,” he said.

The study is certainly an underestimate without the premium costs, said Banthin.

Most Americans “understand that healthcare costs in this country are very high and that our insurance usually leaves us with substantial copays, deductibles, or additional costs,” she said. It makes “our use of healthcare very costly and very financially burdensome,” she said.

Expiring Subsidies Will Mean Higher Burdens

Scott noted in his editorial that the federal safety net was becoming more frayed, with big cuts slated for Medicaid in the coming years and the expiration of enhanced subsidies for Affordable Care Act premiums that have been in effect since 2021.

“Gaffney and colleagues demonstrate that even brief coverage lapses substantially elevate cumulative financial hardship risk over time,” he wrote.

Members of Congress recessed in December for the year without agreeing on a solution to address what could be millions of people paying higher premiums or foregoing insurance coverage. Democrats were able to secure a vote in January in the House on a potential 3-year extension of the enhanced subsidies, but it is not likely that the Senate — with its Republican majority — will approve that bill, Politico reported.

In September, KFF Health News estimated that most of the 24 million Americans who receive insurance through the Affordable Care Act marketplace had been receiving enhanced subsidies. While some might find a way to continue to afford coverage, many are likely to drop out, the health policy research organization said.

Banthin and colleagues estimate that at least 4 million people would lose insurance if enhanced subsidies are not restored. Even if Congress votes to restore those subsidies, it’s not clear that people would be allowed to sign up for coverage because it would be outside the open enrollment period, Banthin told Medscape Medical News.

Without the enhanced subsidies, “We’re expecting to see a significant rise in the share of Americans without health coverage,” which will lead to more foregone care, said Gaffney.

Scott issued a call to action, writing that physicians “cannot remain passive observers to the financial adversity that increasingly accompanies illness and medical care in the US.”

Wadhera agreed. “Cost conversations need to be as routine as asking about side effects,” he said. Doctors should work with pharmacists, social workers, and financial navigators “to help patients act on those conversations.”

Gaffney reported having no relevant conflicts but disclosed that he was a former president of Physicians for a National Health Program, which supports a single-payer health system. Wadhera and Banthin reported having no conflicts.

Alicia Ault is a Saint Petersburg, Florida-based freelance journalist whose work has appeared in many health and science publications, including Smithsonian.com. You can find her on X at @aliciaault and on Bluesky at @aliciaault.bsky.social.