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Financially catastrophic and high-cost cases: definitions, distinctions, and their implications for policy formulation.
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1986
Year
Health ReformHigh-cost Health CareClear DistinctionFinancial ProtectionHealth Care FinancePolicy AnalysisPolicy FormulationHigh-cost CasesEconomic Policy AnalysisEconomic AnalysisPublic HealthInsuranceHealth Services ResearchHealth Insurance ReformPublic PolicyHigh CostHealth PolicyHealth InsuranceEconomic EvaluationFinancePublic FinanceCost IssueHealth EconomicsEconomic PolicyBusinessHealth Care CostFinancingFinancial Risk
To facilitate discourse and improve the formulation of policy, a clear distinction should be made between financially catastrophic and high-cost health care expenditures. I propose that "financially catastrophic" be used to describe cases whose expenditures are large relative to ability to pay (e.g., when out-of-pocket medical expenditures exceed 15% of annual family income) and that "high cost" describe cases whose total expenditures exceed a set amount (e.g., $10,000 in a year's time) regardless of source of payment or ability to pay. Using these distinctions, I show how third-party coverage and other resources determine whether a high-cost case or illness is also financially catastrophic. I illustrate the usefulness of the proposed categorization by applying it to several current policy issues.