Medicare out-of-pocket spending
How Much ‘Skin In The Game’ Do Medicare Beneficiaries Have? The Increasing Financial Burden Of Health Care Spending, 1997—2003
By Patricia Neuman, Juliette Cubanski, Katherine A. Desmond and Thomas H. Rice
Health Affairs
November/December 2007
Rising health costs and an aging population present critical policy challenges. This paper examines the financial burden of out-of-pocket health spending among Medicare beneficiaries between 1997 and 2003. Over this period, median out-of-pocket spending as a share of income increased from 11.9 percent to 15.5 percent. In 2003, the 25 percent of beneficiaries with the largest burden spent at least 29.9 percent of their income on health care, while 39.9 percent spent more than a fifth of their income on health care. Results suggest that sustained increases in out-of-pocket spending could make health care less affordable for all but the highest-income beneficiaries.
http://content.healthaffairs.org/cgi/content/full/26/6/1692
Comment:
By Don McCanne, MD
Hmmm. Most of us are grateful that our seniors have Medicare coverage so that they don’t have to face financial hardship in the event of medical need. But is that assumption valid?
About 40 percent of Medicare beneficiaries spend more than 20 percent of their incomes on health care. For most of them that does constitute a financial hardship that is severe enough such that some will decline beneficial health care services simply because they can’t afford to pay for them.
Advocates of consumer-directed health care support increasing sensitivity to health care costs through higher premiums, deductibles, copayments, coinsurance, donut holes and whatever other patient cost-sharing techniques that can be devised. But Medicare beneficiaries don’t need more lessons on the high costs of their health care. What they need is more affordable access to that care.
Providing financial disincentives to receiving beneficial health care services and products is the exact opposite of what our Medicare policies should be.
Do the nonelderly have a similar problem with a high percentage of out-of-pocket spending on health care? Since most seniors have lower incomes composed of social security benefits and retirement accounts, it would be expected that the out-of-pocket spending on health care would be higher as a percentage of total income for them than it would be for the nonelderly who have higher salaries and wages. And that is true.
Although about 40 percent of Medicare beneficiaries spend more than 20 percent of their incomes on health care, only 7.3 percent of nonelderly adults do likewise.
Wait a minute. 7.3 percent of nonelderly adults spend more than 20 percent of their incomes on health care? That’s close to 20 million people. And for a large percentage of them, having to spend over 20 percent of their incomes on health care does constitute a financial hardship.
Most other nations provide comprehensive health care to everyone at a much lower cost without the need to burden patients with excessive cost sharing. With what we are already spending on health care, certainly we could do as well.