Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure Michael J. O’Grady and Gooloo S. Wunderlich, Editors Committee on National Statistics Division of Behavioral and Social Sciences and Education and Board on Health Care Services Institute of Medicine THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Govern- ing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineer- ing, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropri- ate balance. This study was supported by Contract/Grant No. HHSP23320042509XI, TO#39 between the National Academy of Sciences and the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evalua- tion. Support for the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (award number SES-1024012). Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number-13: 978-0-309-26604-8 International Standard Book Number-10: 0-309-26604-1 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2012 by the National Academy of Sciences. All rights reserved. Printed in the United States of America Suggested citation: National Research Council and Institute of Medicine. (2012). Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Panel on Measuring Medical Care Risk in Conjunction with the New Supplemental Income Poverty Measure, M.J. O’Grady and G.S. Wunderlich, Eds. Committee on National Statistics, Division of Behavioral and Social Sciences and Education, and Board on Health Care Services, Institute of Medicine. Washington, DC: The National Academies Press. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Acad- emy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding en- gineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineer- ing programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is presi- dent of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Insti- tute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sci- ences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Coun- cil is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org PANEL ON MEASURING MEDICAL CARE RISK IN CONJUNCTION WITH THE NEW SUPPLEMENTAL INCOME POVERTY MEASURE MICHAEL J. O’GRADY (Chair), President, West Health Policy Center DAVID M. BETSON, Department of Economics, University of Notre Dame JOHN L. CZAJKA, Mathematica Policy Research, Inc., Washington, DC EDWIN C. HUSTEAD, Actuary (retired), Alexandria, VA EMMETT B. KEELER, Pardee RAND Graduate School, School of Public Health, University of California, Los Angeles WILLARD G. MANNING, Harris School of Public Policy Studies, University of Chicago WILHELMINE D. MILLER, NORC at the University of Chicago CATHY SCHOEN, The Commonwealth Fund, New York, NY P.J. ERIC STALLARD, Social Science Research Institute, Duke University GOOLOO S. WUNDERLICH, Study Director JACQUELINE R. SOVDE, Program Associate JESSICA BANTHIN, Consultant v COMMITTEE ON NATIONAL STATISTICS 2011-2012 LAWRENCE D. BROWN (Chair), Department of Statistics, Wharton School, University of Pennsylvania JOHN M. ABOWD, School of Industrial and Labor Relations, Cornell University ALICIA CARRIQUIRY, Department of Statistics, Iowa State University WILLIAM DuMOUCHEL, Oracle Health Sciences, Waltham, MA V. JOSEPH HOTZ, Department of Economics, Duke University MICHAEL HOUT, Survey Research Center, University of California, Berkeley KAREN KAFADAR, Department of Statistics, Indiana University SALLIE KELLER, Provost, University of Waterloo, Ontario, Canada LISA LYNCH, Heller School for Social Policy Management, Brandeis University SALLY C. MORTON, Biostatistics Department, Graduate School of Public Health, University of Pittsburgh JOSEPH NEWHOUSE, Division of Health Policy Research and Education, Harvard University RUTH PETERSON, Department of Sociology (emeritus) and Criminal Justice Research Center, Ohio State University HAL STERN, Donald Bren School of Information and Computer Sciences, University of California, Irvine JOHN THOMPSON, NORC at the University of Chicago ROGER TOURANGEAU, Westat, Rockville, MD ALAN ZASLAVSKY, Department of Health Care Policy, Harvard Medical School CONSTANCE F. CITRO, Director vii BOARD ON HEALTH CARE SERVICES STEVEN A. SCHROEDER (Chair), Department of Medicine, University of California, San Francisco JOSEPH R. BAKER, Medicare Rights Center, New York ELISABETH BELMONT, Mainehealth, Portland, ME ROBERT A. BERENSON, The Urban Institute, Washington, DC LISA A. BERO, School of Medicine, University of California, San Francisco DAVID BLUMENTHAL, Harvard Medical School and Mongan Institute for Health Policy, Massachusetts General Hospital STUART BUTLER, Center for Policy Innovation, Heritage Foundation JON B. CHRISTIANSON, School of Public Health, University of Minnesota JACK EBELER, Health Policy Alternatives, Inc., Washington, DC ROBERT S. GALVIN, Equity Healthcare and Corporate Private Equity, Blackstone Group, New York REBEKAH E. GEE, Schools of Medicine and Public Health, Louisiana State University CARMEN R. GREEN, Schools of Medicine and Public Health, University of Michigan Health System MAREASA R. ISAACS, National Alliance of Multi-Ethnic Behavioral Health Associations, Silver Spring, MD BRENT C. JAMES, Institute for Health Care Delivery Research, Intermountain Healthcare, Salt Lake City, UT CHARLES N. KAHN, III, Federation of American Hospitals, Washington, DC ELIZABETH A. McGLYNN, Kaiser Permanente Center for Effectiveness and Safety Research, Oakland, CA CYNTHIA D. MULROW, University of Texas Health Science Center, San Antonio MARY D. NAYLOR, New Courtland Center for Transitions and Health and Interdisciplinary Nursing Quality Research Initiative, University of Pennsylvania ALAN WEIL, National Academy for State Health Policy, Washington, DC GAIL R. WILENSKY, Project HOPE, Bethesda, MD ROGER HERDMAN, Board Director ix