Disproportionate Burden of out-of-Pocket Health Care Costs in Late Life
Medicare provides near-universal health care coverage; yet, gaps in the Medicare beneficiary package result in out-of-pocket (OOP) health care costs. These costs are expected to increase, exposing beneficiaries to the risk of increased cost-sharing, economic deprivation, and substantial financial strain. Our purpose is to examine the size and distribution of economic burden of health care spending among community-dwelling Medicare beneficiaries aged 65 and greater across demographic characteristics, income, supplemental insurance status, and health conditions and identify individuals who are most vulnerable to financial strain and economic insecurity.
Methods:
We utilized data from the Medicare Current Beneficiary Survey (MCBS), which is an ongoing, nationally representative, multipurpose survey, combining information from beneficiary interviews and Medicare claims. We examined data from 2007, the year following the implementation of the prescription drug coverage. The study population was restricted to community-dwelling Medicare beneficiaries aged 65 and greater, who were enrolled in Medicare for a minimum of 12 months. The burden of OOP medical expenditures is measured as the percent of income spent on OOP expenditures.
Results:
Our results indicate that the mean amount spent on total health care expenditures (excluding premiums) was $9,977. Total spending and the distribution of economic burden were highly skewed (median = $5,547). The total medical care spending among the top spenders (top 10%) was at least $22,500 per person. The distribution of the economic burden had a median of 4% and an average of 8.7%. In multivariate analyses, when controlling for income, health insurance coverage, and chronic conditions, the highest burden of OOP medical expenses was associated with diabetes and depression, while higher income, HMO participation, and having Medicaid were associated with less burden. Lower-income individuals may have significant difficulty absorbing additional expense given their current OOP cost burden.
Conclusions and Implications:
The economic security of older Americans is threatened by rising health care costs and OOP expenditures, which can be large and burdensome. Because our results indicate dispersion in spending on OOP medical expenditures, it is important to understand which segments of the sample population are disproportionately affected by the burden of OOP cost, and to identify beneficiaries who are most vulnerable to financial strain and economic insecurity due to OOP expenditures. The future challenges of Medicare and supplemental insurance plans utilized by Medicare beneficiaries are numerous. Providing affordable, quality care to an aging population that is growing in size is critical, as is maintaining a financially sound program for future generations of Medicare beneficiaries. Policy makers must carefully consider changes to Medicare and the associated supplemental plans and balance the need for equitable and efficient access to care while minimizing the burden of OOP costs. Modifications to the current distribution of OOP burden are needed, as we pursue greater economic justice and security for an aging America.