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People spend their tax refunds at the doctor

New data from the JPMorgan Chase Institute suggests that when Americans get a tax refund, they use it to take care of health care needs they had been delaying.

The bottom line: People put off health care services based on their ability to pay.

The details:

  • Out-of-pocket health care spending rose by 60% in the week following a tax refund, according to a JPMorgan survey of more than 1 million checking accounts.
  • Most of that extra spending is in-person payments to providers — in other words, people are mostly using their extra cash to go to the doctor, not just to make other payments.
  • Health care spending remained higher for about 75 days after getting a tax refund, then returned to normal.
  • Payments using debit cards spiked by more than 80%. Credit card payments didn’t change.

The bottom line: That has some pretty significant implications as the system keeps heading toward insurance plans with higher out-of-pocket costs.

  • On the one hand, making people more attuned to what they spend on health care is a big part of the case for high-deductible plans.
  • But if people are putting off care they really need until they come into some extra cash, that’s not good for them or their long-term health care costs.
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