By Juliette Cubanski, Tricia Neuman and Karen E. Smith
Kaiser Family Foundation, January 2018
From the Executive Summary
Medicare helps pay for the health care needs of 59 million people, including adults ages 65 and over and younger adults with permanent disabilities. Even so, many people on Medicare incur relatively high out-of- pocket costs for their health care, including premiums, deductibles, cost sharing for Medicare-covered services, as well as spending on services not covered by Medicare, such as long-term services and supports and dental care. The financial burden of health care can be especially large for some beneficiaries, particularly those with modest incomes and significant medical needs.
* In 2013, Medicare beneficiaries’ average out-of-pocket health care spending was 41 percent of average per capita Social Security income; the share increased with age and was higher for women than men, especially among people ages 85 and over.
* Medicare beneficiaries’ average out-of-pocket health care spending is projected to rise as a share of average per capita Social Security income, from 41 percent in 2013 to 50 percent in 2030.
* Half of beneficiaries in traditional Medicare spent at least 14 percent of their per capita total income on out-of-pocket health care costs in 2013. The spending burden was higher for people ages 85 and over, in poor health, and with modest incomes.
* More than one-third (36 percent) of beneficiaries in traditional Medicare, and half of those with incomes below $20,000, spent at least 20 percent of their per capita total income on out-of-pocket health care costs in 2013. By 2030, more than 4 in 10 (42 percent) traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on health-related out-of-pocket costs.
From the Policy Implications
This analysis shows that out-of-pocket health care costs are a substantial and growing burden for many people with Medicare, consistent with other recent research. We found that out-of-pocket health care spending represented a sizable share (41 percent) of Medicare beneficiaries’ per capita Social Security income, on average, in 2013, and is expected to consume half of Social Security income in 2030. Some beneficiaries face greater average out-of-pocket spending as a share of average per capita Social Security income than others, including older women and beneficiaries ages 85 and over. For other beneficiaries, average out-of-pocket health care spending represents a relatively lower share of their average per capita Social Security income, likely due in part to coverage from Medicaid and the Part D Low-Income Subsidy program, which reduces the spending burden, including black beneficiaries and those under age 65. Using a different measure of the out-of- pocket spending burden based on per capita total income, we found that half of beneficiaries in traditional Medicare spent at least 14 percent of their total income on out-of-pocket health care costs in 2013, while more than one-third of beneficiaries spent at least 20 percent. By 2030, more than 4 in 10 traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on out-of-pocket health care costs.
Our results suggest that efforts to strengthen and improve the protections offered by Medicare, Medicaid, and Social Security may be needed to ensure greater retirement security for future generations of older Americans.
Three ways to cut — and improve — Medicare
By Ed Weisbart
STAT, January 17, 2018
The Republicans are right. We should cut Medicare. And I know how: Keep Medicare’s funding for actual health care but eliminate bureaucratic waste, profits, and the expensive and preposterous ban on negotiating drug prices. In other words, get rid of Part C and Part D and absorb the extra features into traditional Medicare.
Medicare Advantage plans continue to grow in popularity, now attracting 31 percent of all Medicare beneficiaries. People make this choice because most Advantage plans offer reductions in copays and deductibles, along with enhanced benefits like membership in gym clubs or including a Medicare Part D pharmacy benefit. We could embed these modest features into traditional Medicare and still reap substantial savings for the national budget.
The arithmetic is easy, the benefits are clear, and the money is there. Take the profit motive out of Medicare to save billions. It’s just a matter of political will.
Ed Weisbart, M.D., is a family physician and chair of the Missouri chapter of Physicians for a National Health Program.
By Don McCanne, M.D.
Social Security and Medicare are intended to provide financial security for the elderly and individuals with major disabilities. Yet average out-of-pocket expenses for Medicare will soon consume half of the average per capita Social Security payments. That’s not much security.
Many individuals do have other income sources to help pay the out-of-pocket expenses of Medicare, but, even there, over 40 percent are expected to spend at least 20 percent of their total income on health-related out-of-pocket costs.
Once again it is obvious that out-of-pocket expenses for Medicare beneficiaries are too high, especially for those heavily dependent on Social Security.
The solution is simple. Expand Medicare benefits to include those covered by Medigap, retiree plans, the Part C Medicare Advantage plans, and the Part D drug coverage, while cutting back on Medicare premiums, deductibles and coinsurance. We could pay for this expansion with the administrative savings and other efficiencies gained through enactment of a single payer Medicare for all program. Let’s do it.
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