The shift to managed care plans in the 1990s brought changes in health insurance benefits that included less stringent cost-sharing requirements for most families with insurance. Despite growth in overall medical care spending, direct out-of-pocket (OOP) spending by families was the same in 1996 as in 1987, and average spending as a share of family income declined. 16.3 percent of families spent 5 percent or more of their incomes on direct payments for medical services; 7.4 percent spent 10 percent or more. This report uses data from the 1996 Medical Expenditure Panel Survey (MEPS) household component and several additional data sources to examine trends in OOP spending, the components of that spending, and the characteristics of families with high OOP costs. Throughout, "family" is defined to include single individuals as well as families of two or more persons.