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ABSTRACT
This study examines the impact of U.S. health policies on out-of-pocket healthcare expenditures, revealing that
certain policies are notably more effective in reducing costs for individuals. The regression model explains 99.5% of
the variation in out-of-pocket expenses (R² = 0.995). Key findings show the Inflation Reduction Act (IRA) as the most
impactful, reducing costs by $0.43 per unit (β =
-0.426, p = 0.007), followed by COVID-19 Response and Health Policy
Changes (CRHPC), which reduces costs by $0.16 (
β =
-0.162, p = 0.019). Government Expenditure on Health, however,
has a positive impact, increasing out-of-
pocket spending by $0.69 per dollar spent (β = 0.695, p = 0.001), suggesting
inefficiencies. Inflation also drives costs up, with each 1% increase resulting in an additional $0.02 out-of-
pocket (β =
Research Article
AN EMPIRICAL ANALYSIS OF THE IMPACT OF HEALTH POLICIES ON
OUT-OF-POCKET HEALTHCARE EXPENDITURE IN USA:
THE PRELIMINARY RESEARCH ON DEVELOPING IMPROVED HEALTH
POLICIES IN THE UNITED STATES
Submission Date:
October 30, 2024,
Accepted Date:
November 04, 2024,
Published Date:
November 16, 2024
Crossref doi:
https://doi.org/10.37547/ajsshr/Volume04Issue11-13
Omolara Adebimpe Adekanbi
PhD, Universidad Autónoma de Ciudad Juárez, Mexico
Phillip Miles George
EconStudies Research Group, Texas
Juan Carlos Hernández Marquez
MSc., El Colegio de La Frontera Norte, México
Antoine Spencer Carilli
EconStudies Research Group, Texas
Aderonke Perpetua Ajama
PhD, Obafemi Awolowo University, Ile Ife
Journal
Website:
https://theusajournals.
com/index.php/ajsshr
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
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0.017, p = 0.032). The findings recommend focusing on high-impact policies like the IRA and CRHPC, while
reevaluating lower-impact programs to optimize resource allocation and control healthcare inflation.
KEYWORDS
Health Policies, Out-of-Pocket Expenditure, Inflation, Reforms, JEL Codes: I18, I13, H51, E31, H75.
INTRODUCTION
The issue of high cost of healthcare in the United
State is a burning topic in political debates. It poses a
major financial burden for millions, with inflation
worsening the strain on household budgets. The
healthcare industry’s profit
-driven practices, including
inflated pricing, complex insurance policies, and a
system that rewards quantity over quality, drive up
expenses.
Insurance
practices
—
such
as
high
deductibles, network restrictions, and delays in care
—
add further financial and logistical barriers for
patients. Additionally, a corporate focus within
healthcare organizations diverts resources from
essential
services
to
profit-generating
areas,
increasing costs.
This situation necessitates an analysis of U.S.
healthcare policies to determine which, at any point in
time, have reduced the financial burden of healthcare
costs on individuals and this is the objective of this
research as a first phase of a project geared towards
formulating better health policies in the United
States. In this research, the analysis was conducted by
applying a new methodology designed by Omolara
Adekanbi, an economist, and a social scientist. She
introduced this methodology in a comparative
analysis between Mexico and Nigeria, where she used
econometric tools innovatively to quantitatively
evaluate 11 national policies and their corresponding
variables over a 48-year period. The variables were
grouped into two groups
–
growth and development
categories (Adekanbi, 2024). For the development
category, Adekanbi combined econometric tools in an
innovative way by using a structural detection
software to identify the year intervals that needed
further analysis. Then, regression analysis was run on
each of the intervals when structural change was
detected.
However, the methodology used in the development
category was applied in the analysis of the variables
that are relevant to this topic which are Out-of-Pocket
Expenditure on Health Care the dependent variable),
the
independent
variables
are
Government
Expenditure on Health Care in current US dollars, and
the policies implemented in the United States from
2000-2024 in the form of dummy variables.
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Overview of the Current Situation Due to High
Healthcare Costs in the United States
The high cost of healthcare in the United States has
emerged as a pressing concern, imposing significant
financial strain on individuals and families across the
nation. While medical advancements have introduced
life-saving treatments and improved quality of care,
the associated costs have escalated, placing essential
healthcare services out of reach for many Americans.
Rising inflation exacerbates the issue, as prices for
everyday necessities
—
such as food and utilities
—
continue to climb, stretching household budgets to
their limits and often forcing individuals to choose
between basic needs and healthcare. Reports indicate
that nearly half of U.S. adults struggle with healthcare
affordability, with a significant portion delaying or
foregoing necessary treatments due to prohibitive
costs.
The high cost of healthcare in the United States has
reached a critical level, deeply impacting the financial
security and well-being of millions. Rising inflation has
intensified these challenges, with November 2021
marking a 6.8% surge
—
reaching a 39-year high.
Essential items like eggs, meat, and poultry saw prices
jump by 12.5%, straining household budgets and
making it even harder for Americans to afford
necessary healthcare services. As a result, nearly one
in three Americans (30%) reported skipping essential
medical care in late 2021, a stark increase from earlier
in the year. More than half of healthcare consumers
experience daily stress related to healthcare costs,
and 42% worry about being able to afford the medical
care they need in the near future (Sarasohn-Kahn,
2022). Prescription drug costs are a significant pain
point, with one-third of consumers concerned about
affording their medications and 20% of Americans
skipping prescriptions to save money. The burden is
particularly heavy for older Americans on Medicare,
many of whom struggle to afford multiple chronic
care medications even under Medicare Part D
coverage. Together, these figures illustrate a
healthcare landscape in the U.S. that has become
unaffordable for many, revealing urgent systemic
issues that need to be addressed to improve access
and affordability in the American healthcare system.
A 2024 KFF survey highlights that nearly half of U.S.
adults find healthcare costs difficult to afford, with
one in four having trouble paying healthcare bills in
the past year. Additionally, 61% of uninsured adults
skipped care due to cost. The public's primary concern
remains lowering out-of-pocket healthcare expenses
(Lopes, Montero, Presiado, & Hamel, 2024).
Factors That Drive Rising Cost of Health Care
A major driver of these rising costs lies in systemic
factors within the healthcare industry. Hospitals,
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insurers, and pharmaceutical companies operate
within a "medical-industrial complex," as described by
Rosenthal (2017) in An American Sickness, where
profit-driven practices often prioritize financial gain
over patient well-being. This commercialization has
led to inflated prices for treatments, medications, and
diagnostic
services,
frequently
resulting
in
unexpected, exorbitant bills that leave patients
financially burdened and confused.
As Elisabeth Rosenthal illustrate the pervasive price
gouging in the healthcare industry. Simple items like a
single Tylenol tablet, which costs only a few cents at a
drugstore, are often billed to hospital patients at $15
or more. Routine procedures, such as MRI scans, cost
Americans upwards of $2,000, while similar scans are
available in other developed countries for only a few
hundred dollars. Laboratory tests, which cost around
$10 to $20 to process, are routinely billed at several
hundred dollars due to excessive administrative
markups. Emergency room visits alone carry a facility
fee between $500 and $3,000, applied simply for
entry, before any treatment is provided.
For patients requiring specific medications, costs are
even more staggering: a single dose of the cancer
drug Avastin can cost as much as $6,000, while insulin,
essential for diabetes management, has surged to
hundreds of dollars per vial despite unchanged
production formulas. These high prices highlight the
healthcare system’s shift toward profit over patient
care, forcing millions to face insurmountable financial
burdens and difficult choices between healthcare and
other essentials. This unsustainable pricing model
reflects a systemic issue within U.S. healthcare,
making reform essential to restoring accessibility and
equity for all Americans.
Insurance practices in the U.S. healthcare system
contribute to exorbitant costs, shifting insurers' focus
from patient support to maximizing profit. Opaque
pricing structures negotiated between insurers and
providers mean that patients often face shockingly
high bills for services they assumed were covered. For
example, patients are sometimes charged $500 or
more for a simple blood test due to administrative
markups and hidden fees, while the same test might
cost a fraction elsewhere. High-deductible health
plans, now increasingly common, require patients to
pay thousands of dollars out-of-pocket before any
insurance coverage begins, with annual deductibles
often exceeding $5,000 for individual plans.
Additionally, co-pays for medications and visits quickly
accumulate, especially for patients managing chronic
conditions
—
some insulin-dependent diabetics, for
instance, are forced to pay hundreds of dollars
monthly for insulin, despite insurance coverage
(Rosenthal, 2017).
Even when a service is covered, insurers may delay or
deny care through practices like “step therapy,”
where patients must try less effective treatments
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before accessing the one initially recommended by
their doctor. These denials can lead to prolonged
appeals processes and delayed care. Network
restrictions further increase costs; if a patient
inadvertently sees an out-of-network provider
—
even
in emergencies
—
they can be liable for hundreds or
thousands of dollars. Rosenthal highlights a case
where a woman was charged nearly $20,000 for an
out-of-network surgeon she did not choose but who
assisted during her in-network procedure. These
practices collectively create a confusing, financially
burdensome landscape that restricts access to care
and leaves patients to shoulder much of the financial
risk while insurance companies focus on profitability
over patient well-being (Rosenthal, 2017).
Another factor driving up cost of health care is that
the U.S. healthcare system often incentivizes doctors
and hospitals to increase the volume of treatments
and procedures, even when they may not be
necessary, due to a reimbursement model that
rewards quantity over quality of care. This "fee-for-
service" model means that hospitals and physicians
earn more for each test, surgery, or procedure
performed,
creating
financial
motivation
to
recommend additional care. Rosenthal highlights
cases where patients underwent costly imaging scans,
procedures, or specialty consultations with limited
medical
justification.
For
example,
Medicare
reimbursements make it more profitable for doctors
to perform high-tech scans, such as MRIs or CTs,
which can cost over $2,000 each, rather than focusing
on preventive care or patient counseling. Such
incentives lead to overutilization of services,
increasing healthcare costs while providing little
added value to patients. This approach not only
inflates costs but also exposes patients to potential
harm from unnecessary treatments, from radiation
exposure in excessive imaging to complications from
unneeded surgeries (Rosenthal, 2017).
Additionally, healthcare pricing is notably opaque
compared to other industries, leaving patients
unaware of costs until they receive overwhelming
bills. Unlike typical goods and services, where prices
are clear upfront, medical bills arrive post-treatment,
often with staggeringly high charges for seemingly
simple procedures. Basic procedures like blood tests
or minor treatments can cost hundreds or even
thousands of dollars, leaving patients unable to
anticipate or manage these expenses.
Furthermore,
as
hospitals
and
healthcare
organizations increasingly adopt a business-first
approach, patient welfare can take a backseat to
financial objectives. Rosenthal describes how many
hospitals now function more like corporations, with
executives and administrators earning some of the
highest salaries in healthcare. For example, in 2017,
the CEO of a major nonprofit hospital earned over $5
million, while other top administrators routinely make
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six-figure incomes. In contrast, the average salary for
a primary care physician, who directly cares for
patients, is often half that amount. This shift has led
hospitals to invest more in revenue-generating
departments, such as cardiology and orthopedics,
which yield higher profits, while underfunding critical
but less lucrative areas like mental health and primary
care. The focus on profit margins has transformed
healthcare facilities from places of healing into profit-
driven entities, where patients are seen as revenue
sources and medical decisions may be swayed by
financial rather than medical considerations.
Prediction of Higher Rise in Cost
Recent analyses, such as PwC's projection for 2025,
underscore that medical costs are expected to
continue rising, driven by inflationary pressures,
higher drug prices, and increased demand for
behavioral health services. Without systemic reform,
these trends are likely to persist, further intensifying
the financial challenges facing Americans in accessing
quality healthcare. The critical need for a more
sustainable and equitable healthcare model has never
been more apparent, as millions of Americans
contend with the unaffordability of care in one of the
world's most advanced healthcare systems.
The projected medical cost trend in 2025 is anticipated
to hit 8% for group plans and 7.5% for individual plans,
marking the highest rate in over a decade. Key drivers
of this increase include inflation, elevated prescription
drug costs
—
especially from high-utilization drugs like
GLP-1
agonists
for
diabetes
and
weight
management
—
and increased demand for behavioral
health services post-pandemic. Operational costs for
healthcare providers are also rising, fueled by wage
inflation and attempts to recover these expenses
through health plan contracts. Furthermore, ongoing
consolidation among hospitals, private equity, and
physician groups is a significant factor, intensifying
contract negotiations and driving costs higher.
Although the adoption of biosimilar medications
presents some cost-saving opportunities, these
deflators are insufficient to counteract the overall
upward trend, suggesting that new strategies are
urgently needed to address rising healthcare
expenses effectively (PwC, 2024).
However, the CMS reported that Medicare "retail"
prescription drug spending is initially expected to face
upward pressure due to the Inflation Reduction Act
(IRA) restructuring Part D benefits, including a $2,000
cap on out-of-pocket costs and a shift of rebates from
the program to the point of sale once drug
negotiations commence. In contrast, downward
pressure on Medicare spending is anticipated from
manufacturer discounts for low-income beneficiaries
(starting in 2025) and IRA provisions tying drug price
increases to the Consumer Price Index (CPI) and
enabling drug price negotiations. Beginning in 2028,
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growth rates for Medicare outpatient hospital,
physician, and clinical services spending are projected
to decrease, largely due to the IRA’s drug negotiation
provisions affecting Medicare Part B drugs. The
National Health Expenditure (NHE) projections also
indicate reduced out-of-pocket costs due to more
generous Medicare Part D benefits, including the
elimination of the 5% coinsurance for catastrophic
coverage in 2024, a $2,000 cap on Part D out-of-
pocket expenses in 2025, and the start of drug price
negotiations in 2026
Efforts to address healthcare affordability, including
legislation like the Affordable Care Act (ACA) and the
Mental Health Parity and Addiction Equity Act
(MHPAEA), have focused on expanding access to care
and ensuring parity for mental health services.
However, these initiatives have not been fully
effective in controlling the root causes of high
healthcare costs. For example, while the ACA
increased insurance coverage, it fell short of directly
controlling costs, leaving many insured individuals still
struggling with high premiums, deductibles, and out-
of-pocket expenses. Therefore, it is necessary to study
the various policies that has been implemented in the
United States.
Brief History of HealthCare Policies in USA
The history of health policies in the United States
reflects a gradual evolution shaped by social needs,
economic pressures, and political ideologies. The
earliest initiatives began in the early 20th century,
with the Progressive Era endorsing social insurance,
including health coverage. As outlined in a journal
publication, Smith (2023) outlined the policies from
historical dates to recent years. The Sheppard-Towner
Act of 1921 provided federal funding for maternal and
child health, laying a foundation for federal
involvement in healthcare
During the Great Depression, economic hardship
prompted President Franklin D. Roosevelt to propose
broad social reforms, culminating in the Social
Security Act of 1935, which included public health and
welfare components. After World War II, President
Truman’s call for national health insurance brought
the issue to the forefront, though legislative action
stalled amid opposition (Smith, 2023).
The 1960s marked significant advancements with the
establishment of Medicare and Medicaid under
President Lyndon B. Johnson, providing healthcare
access to the elderly, low-income families, and
vulnerable populations. Subsequent decades saw
incremental reforms, including the Emergency
Medical Treatment and Labor Act (EMTALA) in 1986,
ensuring emergency care for all, regardless of ability
to pay (Smith, 2023).
In 2010, the Affordable Care Act (ACA) represented
the most sweeping reform in decades, expanding
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insurance coverage, protecting those with pre-
existing conditions, and mandating essential health
benefits. While it increased access, high costs and
systemic inefficiencies persisted, leading to ongoing
debates about healthcare reform. Each policy
milestone reflects the nation's complex journey
towards balancing access, quality, and affordability in
healthcare (Smith, 2023).
Policies on Implemented on Health Care 2000-2024
2000 - Breast and Cervical Cancer Treatment and
Prevention Act
In 2000, the U.S. government enacted the Breast and
Cervical Cancer Treatment and Prevention Act, which
allowed states to expand Medicaid coverage for
uninsured women diagnosed with breast or cervical
cancer through screenings conducted by the Centers
for Disease Control and Prevention (CDC). This act
aimed to reduce mortality rates from these cancers by
providing critical access to treatment for women who
might otherwise lack financial resources for care. By
incorporating these services into Medicaid, the
legislation targeted populations at greater risk of late-
stage diagnoses due to limited healthcare access. The
act was pivotal in advancing preventative healthcare
services, especially for low-income women, by
aligning cancer treatment with federal health support.
2002 - Health Center Growth Initiative
The Health Center Growth Initiative of 2002 focused
on expanding federally funded health centers to reach
medically underserved communities across the U.S.
These centers, commonly located in rural and low-
income urban areas, provide primary care services
regardless of patients’ ability to pay, offering a sliding
fee scale based on income. The initiative sought to
reduce healthcare disparities by improving access to
basic medical care and preventive services for
populations historically underserved by the healthcare
system. This program was a crucial step toward
reducing emergency room dependency for non-
urgent care and enhancing healthcare equity.
2003 - Medicare Prescription Drug, Improvement, and
Modernization Act (MMA)
The Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 introduced substantial
changes to Medicare, including the creation of
Medicare Part D, which offered voluntary prescription
drug coverage for seniors and disabled individuals.
This program allowed beneficiaries to access
discounted medications through private insurance
plans approved by Medicare, addressing the high out-
of-pocket costs previously faced by those relying on
prescription drugs. Additionally, the MMA established
Health Savings Accounts (HSAs), which allowed
individuals with high-deductible health plans to set
aside tax-free funds for medical expenses. Together,
these provisions sought to modernize Medicare,
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alleviate drug costs, and incentivize savings for
healthcare expenses.
2005 - Deficit Reduction Act
In 2005, the Deficit Reduction Act was enacted to curb
federal spending, notably impacting Medicaid. The act
authorized states to adjust Medicaid premiums, cost-
sharing, and benefits, effectively giving states greater
flexibility to manage their budgets. It introduced
measures that allowed states to impose higher
premiums and restrict benefits for Medicaid enrollees,
especially those deemed capable of cost-sharing. As
part of the act, changes to Medicare took effect in
2006, aligning Medicaid rules more closely with
private insurance standards to reduce costs. The act
represented a shift toward a more conservative
approach to healthcare financing within public
programs.
2006
-
State-Level
Healthcare
Reforms
(Massachusetts and San Francisco)
In 2006, Massachusetts introduced a landmark
healthcare reform aimed at achieving near-universal
coverage. This policy required all residents to obtain
health insurance and provided subsidies to make
coverage affordable for low- and middle-income
individuals. A few months later, San Francisco
implemented a similar reform through its "Healthy
San Francisco" program, designed to provide
universal healthcare access for city residents, though
not necessarily through insurance. These reforms
were pioneering at the state level, inspiring the
structure of the Affordable Care Act (ACA) and
underscoring state governments' role in addressing
healthcare gaps and experimenting with universal
coverage models.
2008 - Mental Health Parity and Addiction Equity Act
The Mental Health Parity and Addiction Equity Act of
2008 expanded on previous parity laws to mandate
that group health plans offering mental health and
substance use disorder benefits could not impose
more restrictive limits on these services than on
medical/surgical benefits. This act aimed to reduce the
stigma and discrimination in healthcare coverage that
often led to inadequate mental health treatment. By
enforcing parity, the law sought to make mental
health and substance use services more accessible
and affordable, marking an important milestone in
addressing mental health as an integral part of overall
health.
2009 -
Children’s Health Insurance Program (CHIP)
Reauthorization Act
The 2009 reauthorization of the Children’s Health
Insurance Program (CHIP) significantly increased
funding, allowing states to expand coverage for
uninsured children. Originally established in 1997, CHIP
provides health insurance to children in low-income
families who do not qualify for Medicaid but cannot
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afford private insurance. The reauthorization included
measures to cover an additional four million children,
focusing on preventive care, routine checkups, and
access to essential health services. By boosting
funding and expanding eligibility, the act aimed to
reduce the number of uninsured children and support
healthier developmental outcomes.
2010 - Patient Protection and Affordable Care Act
(ACA)
Enacted in 2010, the Affordable Care Act (ACA)
represented the most comprehensive healthcare
reform since Medicare and Medicaid's establishment.
The ACA required most Americans to have health
insurance and provided subsidies to make coverage
more affordable for low- and middle-income
individuals. It expanded Medicaid eligibility in
participating
states
and
prohibited
insurance
providers from denying coverage due to pre-existing
conditions. Additionally, the ACA allowed young
adults to remain on their parents' insurance until age
26 and required essential health benefits across all
insurance plans. By 2014, the individual mandate took
effect, aiming to create a more inclusive insurance
pool, while the act’s provisions significantly reduced
the uninsured rate and increased access to preventive
services.
2016 - Affordable Care Act Adjustments by President
Trump
In 2016, President Trump initiated adjustments to the
ACA, including removing the penalties associated with
the individual mandate, which had required most
Americans to maintain health insurance. His
administration promoted short-term, limited-duration
health plans as an alternative to ACA-compliant plans,
appealing to those seeking lower-cost, minimal-
coverage options. Additionally, new Medicare
Advantage options were introduced to offer
beneficiaries increased flexibility. Transparency in
healthcare pricing became a priority, along with
efforts to lower Medicare Advantage premiums.
These adjustments aimed to address criticisms of the
ACA's affordability but raised concerns over the
adequacy of coverage and long-term impacts on
insurance markets.
Critics of President Trump’s a
ctions on the Affordable
Care Act (ACA) highlight several key points of
contention. First, the administration significantly
reduced funding for ACA outreach and shortened the
enrollment period, which limited public awareness
and accessibility to insurance exchanges. Second,
Trump’s administration cut subsidies for insurance
companies
participating
in
ACA
exchanges,
undermining financial stability for insurers and
increasing premiums. Third, it promoted alternative,
lower-quality insurance plans that did not meet ACA
standards, attracting healthier individuals and
destabilizing the exchanges by leaving them with
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higher-risk enrollees. Fourth, the administration
encouraged states to implement work requirements
and other barriers for Medicaid beneficiaries, which
critics argue led to decreased enrollment among
eligible individuals. Fifth, a “public charge” rule
discouraged legal immigrants from enrolling in
Medicaid, creating additional barriers to healthcare
access for vulnerable populations. Finally, the Trump
administration supported a Supreme Court challenge
to invalidate the ACA, aiming to dismantle the law
entirely, an action that could jeopardize coverage for
millions. These actions have been seen by critics as
systematic attempts to weaken the ACA’s found
ation
and accessibility (Thompson, 2020).
2020-2021 - COVID-19 Response and Health Policy
Changes.
The COVID-19 pandemic led to unprecedented policy
actions, including the launch of Operation Warp
Speed to accelerate vaccine development and
distribution. The government expanded telemedicine
access, especially in rural and underserved areas, to
reduce in-person visits and ensure continuity of care
during lockdowns. Additionally, several emergency
measures allowed for increased flexibility in Medicaid
enrollment and extended insurance subsidies to
mitigate the pandemic's economic impact. These
policies underscored the critical role of government in
addressing public health crises and highlighted
telemedicine’s potential in increasing healthcare
accessibility.
2021-2024 - Biden Administration Initiatives
Under the Biden administration, several healthcare
initiatives were introduced. The American Rescue Plan
Act (ARPA) expanded ACA subsidies, making health
insurance more affordable for millions of Americans,
and extending temporary subsidies that had been
introduced during the pandemic. The Inflation
Reduction Act (IRA) continued these subsidies,
encouraged states to maintain continuous Medicaid
enrollment, and promoted Medicaid expansion,
resulting in a reduced uninsured rate. Together, these
policies aimed to solidify gains in healthcare access
achieved by the ACA and address long-standing
coverage gaps, particularly for low-income individuals
and families.
On June 2021, the Biden administration has proposed
a rule to reverse several Trump-era changes to the
Affordable Care Act (ACA) marketplaces, aiming to
restore protections and improve coverage access,
particularly for underserved communities. Key aspects
include reinstating Obama-era guidelines for Section
1332 waivers, which require states to demonstrate
that
their
proposed
changes
will
maintain
comprehensive, affordable coverage that protects
vulnerable populations
—
contrasting with the Trump-
era relaxation of these standards.
Additionally,
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11
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81-99
OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
the rule restricts states from using private entities for
ACA enrollment, ensuring that consumers, especially
those in need, can access coverage through public
marketplaces. The proposed rule also repeals the
Trump “two
-
bill” abortion policy, restoring flexibility
in compliance and allowing insurers alternative ways
to meet the ACA's separate premium requirement for
abortion services. To expand access, the Biden
administration plans to allow individuals with incomes
up to 150% of the federal poverty level to enroll or
switch plans monthly, a provision that complements
the American Rescue Plan Act. The open enrollment
period would be extended through January 15, giving
people more time to adjust plans if necessary.
Furthermore, increased funding for navigators would
allow them to provide post-enrollment support to
assist enrollees in resolving issues. Together, these
changes represent a significant shift back to
reinforcing ACA marketplaces, expanding outreach,
and supporting vulnerable populations (Jost, 2021).
Another policy enacted by President Biden is the
Inflation Reduction Act, a prescription drug law, into
effect on August 16, 2022. This legislation offers
substantial financial relief for millions of Medicare
beneficiaries by enhancing benefits, reducing drug
prices,
and
reinforcing
Medicare’s
long
-term
sustainability.
On June 7, 2023, the U.S. House of Representatives
and Senate introduced the Screening for Communities
to Receive Early and Equitable Needed Services
(SCREENS) for Cancer Act. This legislation aims to
extend the National Breast and Cervical Cancer Early
Detection Program (NBCCEDP) through 2028. For
over 30 years, the NBCCEDP has been instrumental in
providing essential breast and cervical cancer
screenings, follow-up care, and treatment for low-
income, uninsured, and underinsured women. The
SCREENS Act seeks to expand outreach efforts,
helping underserved communities access these vital
cancer detection services (American Cancer Society,
2023). These policies reflect an evolving U.S.
healthcare landscape focused on expanding access,
improving affordability, and adapting to changing
health needs, such as mental health, preventative
care, and public health emergencies (American Cancer
Society, 2023).
On February 3, 2024, the Biden administration
finalized the rol
ling back of Trump’s rules on ACA.
METHODOLOGY
Data analysis was conducted on SPSS software by
running
a
regression
between
Out-of-pocket
expenditure on health which represents personal
spending by individuals on health, government
expenditure on health and the policies implemented
from year to year but only from 2000 to 2023.
SOURCES OF DATA
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VOLUME
04
ISSUE
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OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
The values for the Out-of-Pocket Expenditure on
Health Care were obtained from World Bank Data
which indicated that this variable is the health
expenditure through out-of-pocket payments per
capita in USD. Out of pocket payments are spending
on health directly out of pocket by households in each
country. The available data from this source is from
year 2000 to 2021, hence data for 2022 was obtained
from CMS.gov which is the website of the Centers for
Medicare & Medicaid Services and converted to per
capita values. CMS reported that out of pocket
spending grew 6.6% to $471.4 billion in 2022.
Note that the 2023 value is a projection obtained from
Fiore et al (2024) as information for recent years are
not immediately reported.
Likewise, the values of Government Expenditure on
health care were obtained from World Bank Data and
is described as the domestic general government
health expenditure per capita, PPP (current
international $), which is the public expenditure on
health from domestic sources per capita expressed in
international dollars at purchasing power parity,
available values are from 2000-2021. In 2022, the total
government expenditure is 4.465 trillion as reported
by Peterson KFF Health System Tracker . Fiore et al
(2024) presented an exhibit of projections in a journal
publication based on data from sources such as
Centers for Medicare and Medicaid Services (CMS),
Office of the Actuary, National Health Statistics
Group, and Department of Commerce, Bureau of
Economic Analysis and Census Bureau. The projection
shows that in 2023, national health expenditures are
projected to have totaled $4.8 trillion as growth is
estimated to have accelerated to 7.5 percent (from 4.1
percent in 2022). The PPP conversion factor is
constantly 1, therefore these figures were retained as
they are and then divided by the population for each
year.
The policies implemented on health care in the United
States from 2000-2024 to be used in form of dummy
variables in the analysis, were obtained from the
compiled literature as referenced.
Model Specification
Y = β
0
+ β
1
X
1t
+ β
2
D
it
+ β
3
X
3t
+ β
4
X
4t
+
β
5
X
5t
+
ε
t
(1)
Where Yt = Out-of-Pocket/capita, Xt = Government
Expenditure on Health, Dit = Policies (when not
implemented = 0, when implemented = 0, X3 =
Inflation Rate, εt = error term
Result of Regression Analysis
Table 1.0
Model Summary
b
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ANOVA
a
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
.739
14
.053
123.983
<.001
b
Residual
.003
8
.000
Total
.742
22
a. Dependent Variable: Out-of-pocket expenditure
b. Predictors: (Constant), TIPCG , HCGI, RMHHI, INFL , MHPAE, MMA, ACA_A, IRA, DRA, ACA, SLHR, CRHPC,
CHIP_A, Government Expenditure on Health
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
1.548
2.755
.562
.590
Government Expenditure on Health
.695
.142
1.604
4.907
.001
HCGI
-.009
.035
-.011
-.271
.793
MMA
.019
.030
.036
.641
.540
DRA
-.005
.029
-.011
-.170
.869
SLHR
-.002
.028
-.005
-.080
.938
MHPAE
-.035
.032
-.094
-1.111
.299
CHIP_A
.013
.040
.035
.327
.752
ACA
-.060
.035
-.165
-1.687
.130
ACA_A
-.028
.033
-.059
-.845
.422
CRHPC
-.162
.055
-.304
-2.945
.019
INFL
.017
.006
.152
2.601
.032
IRA
-.426
.119
-.484
-3.587
.007
RMHHI
-.041
.305
-.014
-.133
.897
TIPCG
.001
.003
.011
.379
.715
a. Dependent Variable: Out-of-pocket expenditure
Source: SPSS Analysis run by authors
Interpretation of Results
The regression results provide insights into the impact
of various factors on out-of-pocket healthcare
expenditure.
The R squared value is .995 which means that the
model explains 99.5% of the variation in the
dependent variable (out-of-pocket expenditure on
health) caused by the independent variables.
Constant: The intercept (1.548) is not statistically
significant (p = 0.590), indicating that when all
predictors are zero, the baseline level of out-of-pocket
expenditure is not meaningfully different from zero.
Model
R
R Square
Adjusted R Square
Std. Error of the
Estimate
1
.998
a
.995
.987
.0206294
a. Predictors: (Constant), TIPCG , HCGI, RMHHI, INFL , MHPAE, MMA, ACA_A, IRA,
DRA, ACA, SLHR, CRHPC, CHIP_A, Government Expenditure on Health
b. Dependent Variable: Out-of-pocket expenditure
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Government Expenditure on Health: This variable has
a positive and statistically significant effect on out-of-
pocket expenditure (B=0.695, p=0.001), when there is
a unit increase ($1) in government expenditure, out-of-
pocket expenditure on health will increase by 0.695
(approx. $0.69) indicating that higher government
spending on health is associated with increased out-
of-pocket costs. This suggests that government
spending may not be sufficiently reducing individual
costs.
CRHPC (COVID-19 Response and Health Policy
Changes): This variable has a negative effect but
reducing effect on out-of-
pocket costs (B=−0.162,
p=0.019), meaning it significantly reduces out-of-
pocket spending. This indicates that Health Center
Growth Initiative are effective in reducing the financial
burden on individuals.
INFL (Inflation): Inflation has a positive effect but
increasing effect on out-of-pocket expenditure
(B=0.017, p=0.032), showing that as inflation rises by
1%, out-of-pocket costs also increases by $0.02. This
result aligns with the understanding that inflation
drives up healthcare costs.
IRA (Inflation Reduction Act): The Inflation Reduction
Act has a significant and negative association with
out-of-
pocket costs (B=−0.426, p = 0.007), suggesting
that it effectively reduces individual healthcare
expenditures. Since programs cannot be measured in
units, it is assumed that the existence of the program
has a potential of reducing out of pocket cost at the
rate of $0.43 each year.
ACA (Affordable Care Act) and ACA_A (Amended
ACA): Neither ACA nor its amendments have a
statistically significant impact on out-of-pocket
spending in this model (p=0.130 and p=0.422,
respectively), indicating their effect might be limited
or inconsistent in reducing out-of-pocket costs.
Nevertheless, ACA has an estimate coefficient of -.060
signifying that it has the potential of reducing out of
pocket cost by $0.06 as the program continues, while
ACA amended by Trump’s administration had a less
effective impact on out-of-pocket expenditure at
–
0.028 which means that it had a potential of reducing
out of pocket expenditure at the rate of $0.03 per
year.
Other Variables (HCGI, MMA, DRA, SLHR, MHPAE,
CHIP_A, RMHHI, TIPCG): These variables do not show
significant effects on out-of-pocket expenditure, as
their p-values are all above 0.05, suggesting they have
no meaningful impact within this model. The Health
Center Growth Initiative has a potential of reducing
out of pocket expenditure at the rate of $0.09 each
year, the Medicare Prescription Drug, Improvement,
and Modernization Act has a potential of causing an
increase of approx. $0.02 each year in out-of-pocket
expenditure, the Deficit Reduction Act shows a
potential of reducing out of pocket expenditure which
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conforms to the expectation that increased
government spending can lead to crowding out, in
which demand will increase and then prices will
eventually shoot up, but the deficit reduction act puts
a limit to government spending on health.
The State-Level Healthcare Reforms are only
implemented in Massachusetts and San Francisco;
however, it shows a good potential at a coefficient of
-0.002, showing it can reduce out of pocket
expenditure if implemented nation-wide. The Mental
Health Parity and Addiction Equity Act shows a
potential of reducing out of pocket expenditure by
$0.35, the Children’s Health Insurance Program (CHIP)
Reauthorization Act will cause out of pocket
expenditure to increase by $0.01, The Real Medium
Household Income will have a reducing impact of -
.041for every unit increase in the independent
variable. The Taxes on Income, Profits, & Capital
Gains has an increasing but low effect on out-of-
pocket expenditure at $0.001 per unit increase.
Fig. 2.0 Effectiveness Ranking of Policies and Economic Variables
Effectiveness Rank
Policies and Economic Variables
•
Inflation Reduction Act (IRA)
•
COVID-19 Response and Health Policy Changes (CRHPC)
•
Affordable Care Act (ACA)
•
Mental Health Parity and Addiction Equity Act (MHPAE)
•
State-Level Healthcare Reforms (SLHR)
•
Deficit Reduction Act (DRA)
•
Health Center Growth Initiative (HCGI)
•
Medicare Prescription Drug, Improvement, and Modernization Act
(MMA)
•
Children’s Health Insurance Program Reauthorization Act (CHIP_A)
•
Real Medium Household Income (RMHHI)
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Effectiveness Rank
Policies and Economic Variables
•
Taxes on Income, Profits, & Capital Gains (TIPCG)
Source: Composed based on the Details of the Regression Result
RECOMMENDATIONS
Based on the results, it is recommendable to continue
and strengthen government actions and policies
implemented during the period of COVID break out, as
well as the Inflation Reduction Act: Both the COVID-19
Response and Health Policy Changes (CRHPC) and the
Inflation Reduction Act (IRA) as variables have shown
significant reductions in out-of-pocket costs. Efforts
should focus on maintaining and possibly expanding
these programs to maximize their cost-reducing
effects.
It is necessary to reassess Government Health
Expenditure
Allocation
because
despite
high
spending, government expenditure on health appears
to increase out-of-pocket costs, possibly due to
inefficiencies. A detailed review of fund allocation and
spending efficiency could help redirect resources to
areas with direct impacts on reducing individual
expenses. This could also be ascribed to the common
effect of government spending which is inflation.
It will be beneficial to expand ACA’s Cost
-Reduction
Potential. Although not statistically significant, the
Affordable Care Act (ACA) shows potential in lowering
out-of-pocket expenses. Future modifications could
strengthen its effectiveness, particularly by enhancing
provisions that directly reduce individual costs.
To address inflation impact since it correlates with
higher out-of-pocket costs, policies focusing on price
regulation in healthcare, especially in high-cost areas
like pharmaceuticals and hospital services, could help
mitigate inflation’s effect on consumer expenses.
Policies with minimal or no statistically significant
impact on reducing out-of-pocket costs, such as
CHIP_A may need reevaluation or restructuring.
Overall, efforts should prioritize cost-reducing policies
like the Inflation Reduction Act (IRA) and COVID-19
Response and Health Policy Changes (CRHPC), which
have demonstrated effective reductions in out-of-
pocket expenses. Additionally, exploring strategies to
manage inflationary pressures in healthcare could
further help contain rising costs for individuals.
CONCLUSION
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The purpose of the research is to identify which
policies have a reducing effect on out-of-pocket
healthcare expenditures borne by individuals in the
United States. The findings show that not all health
policies are equally effective in reducing out-of-pocket
costs, and a targeted approach is essential. Policies
like the Inflation Reduction Act (IRA), COVID-19
Response and Health Policy Changes (CRHPC),
Affordable Care Act (ACA), and Mental Health Parity
and Addiction Equity Act (MHPAE) demonstrate
measurable success in alleviating out-of-pocket costs
for individuals. In contrast, other programs, such as
the
Children’s
Health
Insurance
Program
Reauthorization Act (CHIP_A) and the Health Center
Growth Initiative (HCGI), may benefit from resource
reallocation to more impactful initiatives. Inflation
control measures in healthcare, alongside expanded
state-level and mental health reforms, would further
ensure that U.S. health policy effectively addresses
affordability challenges for individuals. Continued
focus on proven cost-reduction policies will lead to a
more sustainable and equitable healthcare system for
all. The significance of this research is grounded in the
premise that health should be considered a
fundamental right, and under this premise, public
policies should be designed to ensure universal access
to healthcare.
This paper represents the initial phase of research
aimed at developing improved health policies in the
United States. The subsequent phase will involve an
in-depth investigation into the deliberate inflation of
prescription drug and treatment costs, with the
objective of examining the potential collusion among
business entities, pharmaceutical manufacturers, and
medical practitioners. The ultimate goal of the second
phase is to propose policy frameworks designed to
prevent and mitigate intentional price manipulation in
the healthcare sector.
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