There is very little cushion in family budgets for health care costs — even for families with insurance coverage.

So says the Center for Studying Health System Change (CSHSC), which regular Health Populi readers know is one of my most valued sources on information on the microeconomy of health in the U.S.

CSHSC’s latest Issue Brief is succinctly titled, Living on the Edge: Health Care Expenses Strain Family Budgets. Simply put, American families’ budgets are strained in the economic downturn; if you’re sick, managing chronic conditions, and fall into the middle to lower income earning groups, your budget for health care has hit the fiscal wall.

The report combines data from last year’s Health Tracking Survey, which ended interviews in January 2008 (so well in advance of the 2008 economic downturn) with more in-depth interviews conducted in September 2008. For insights into the consumer health spending insights derived from the 2007 survey, please visit Health Populi’s post discussing this at, More consumer health financing troubles.

Health Populi’s Hot Points: This Issue Brief raises the question of how consumer spending on health care should inform health reform discussions. CSHSC’s data clearly demonstrates that more families experience serious financial problems with medical bills when out-of-pocket medical spending exceeds 2.5% of family income.

The financial burden of out-of-pocket expenses can substantially vary depending where you are on the income continuum.

In health reform discussions, there’s been less attention concerning affordability of out-of-pocket expenditures for services.

In current Medicaid programs, total out-of-pocket spending cannot exceed 5% of family income for enrollees earning 150% of the federal poverty level. But CSHSC points out that this threshold of out-of-pocket spending may be too high for low-income families — and, instead, discourages enrollment among the very population for which this program seeks to provide health security.

There is a conversation right now about whether health care reform should be an integral part of the macroeconomic recovery effort. The key point which supports a “yes” is that the decreasing affordability of health care is directly related to the indisputable fact that health costs have been increasing many times faster than GDP growth.