What does "out-of-pocket spending" refer to in health care?

Out-of-pocket spending in health care specifically refers to the expenses that patients must pay directly for health care services, which includes costs not covered by their health insurance. This can encompass a range of costs such as deductibles, copayments, and any charges for services that the insurance does not fully cover. Understanding this concept is crucial, as it highlights the financial burden that patients can face despite having health insurance coverage, which may only pay for a portion of their medical expenses. This distinction is important in health economics because it affects patients' access to care, their ability to seek timely treatment, and ultimately their health outcomes. It also plays a significant role in discussions about health policy and reform, where efforts may focus on reducing out-of-pocket costs to improve affordability and access to necessary health services.