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Out-of-Pocket Spending Grew Over 200% among ESI Enrollees Diagnosed with Cancer

Cancer diagnoses can have devastating psychological and financial tolls on patients and their families. Previous research shows that Medicare beneficiaries who are newly diagnosed with cancer experience health care costs that can reach close to a quarter of household income in the year following diagnosis. People with employer-sponsored insurance (ESI) may experience even greater financial burden given that they pay higher prices than Medicare enrollees for many health care services, though this may be offset by more generous benefit design (e.g., an out-of-pocket maximum).

In this brief, we examined total and out-of-pocket spending among ESI enrollees in HCCI's claims database who were newly diagnosed with cancer between 2013 and 2018. We examined how much people with new cancer diagnoses paid out-of-pocket in the year leading up to and following their cancer diagnosis. We also assessed how spending was distributed in the year following diagnosis and the services on which people spent most in this period. 

Total Medical Spending Grew Over 220% in the First Quarter Following a Cancer Diagnosis

To examine how spending changed following a cancer diagnosis for enrollees in our data, we calculated spending per person in the four quarters prior to diagnosis and the four quarters following diagnosis. We estimated total medical spending and out-of-pocket spending for each person in each quarter, controlling for patient demographics including their pre-diagnosis health status (i.e., comorbidities) and time relative to diagnosis.

As shown in Figure 1, average total medical spending increased in the quarter leading up to the cancer diagnosis ("1 qtr pre-diagnosis"), peaked in the quarter including and following diagnosis and then declined, though post-diagnosis spending remained higher than pre-diagnosis spending throughout the year.

Specifically, average quarterly spending was $1,578 in the second, third, and fourth quarters prior to diagnosis. Average spending then increased to $2,706 in the quarter immediately preceding diagnosis (a 71% increase over the earlier quarters) likely due to procedures, tests, and acute medical events that resulted in the diagnosis. Most post-diagnosis spending was concentrated in the quarter immediately following the diagnosis (red bar), which includes the day of diagnosis. In this quarter, average spending was just over $6,000, more than 280% higher than the average quarterly spending before diagnosis, excluding the quarter just before the diagnosis. The average quarterly spending was $3,277 in the second, third, and fourth quarters following diagnosis (a 108% increase compared to quarters before diagnosis).

Figure 1. Total Spending Rose Over 200% Following Cancer Diagnosis 

ESI Enrollees Spent Close to $700, on Average, in the Quarter Following a Cancer Diagnosis

On average, enrollees spent $693 out-of-pocket in the first quarter following a cancer diagnosis, as shown in Figure 2 (red bar); this was over twice as high as average quarterly spending in the four quarters pre-diagnosis ($291). Following a cancer diagnosis, out-of-pocket spending grew especially for administered drugs (117% higher in the quarter of diagnosis compared to pre-diagnosis), procedures (73% increase), and lab services (14% increase), as shown in the Downloadable Data accompanying this brief.

As with total spending, out-of-pocket spending declined following the quarter of diagnosis, though it remained higher than prior to diagnosis. In the second, third, and fourth quarters following diagnosis (blue bars), average out-of-pocket spending was $330, compared to an average of $260 in quarterly spending pre-diagnosis, excluding the quarter just before the diagnosis when there was an increase in spending. At least in part, drops in out-of-pocket spending following the initial spike in the quarter of diagnosis may reflect benefit design (e.g., reaching the deductible or even out-of-pocket maximum) protecting patients from catastrophic out-of-pocket expenses.

Figure 2. Average Out-of-Pocket Rose to Nearly $700 Following a Cancer Diagnosis 

ESI Enrollees Newly Diagnosed with Cancer Experienced an Immediate Increase in Spending

An unanticipated spike in out-of-pocket spending, especially within a short period as we see following a cancer diagnosis, may force difficult choices between health care and other necessities (e.g., housing, food) and lead to unpaid medical bills and medical debt. Financial strain may be especially devastating for lower-income families, who are less likely to have disposable income to weather financial shocks.

The financial burdens of cancer treatment and management extend beyond what we can capture in claims data, including loss of wages and family caregiving resources. Importantly, our ability to track individuals' health care spending and use in the HCCI data for the year following a cancer diagnosis depends on their ability to keep working and thereby maintain their insurance coverage (unless they are a dependent on a family member's plan). Therefore, the spending and use data shown here may be less representative of individuals who lose their jobs due to a new diagnosis. Claims data, however, do provide a window into the timing and substantial magnitude of the financial burden of a cancer diagnosis, even among those with health insurance. 

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