Monday, May 15, 2017

Medicare Out of Pocket Costs: More Than You May Think

The Commonwealth Fund has released a new issue brief regarding Medicare out of pocket costs. Medicare Beneficiaries’ High Out-of-Pocket Costs: Cost Burdens by Income and Health Status examines the out of pocket costs faced by Medicare beneficiaries" "Fifty-six million people—17 percent of the U.S. population—rely on Medicare. Yet, its benefits exclude dental, vision, hearing, and long-term services, and it contains no ceiling on out-of-pocket costs for covered services, exposing beneficiaries to high costs."  The issue brief concludes that

More than one-fourth of all Medicare beneficiaries—15 million people—spend 20 percent or more of their incomes on premiums plus medical care, including cost-sharing and uncovered services. Beneficiaries with incomes below 200 percent of the poverty level (just under $24,000 for a single person) and those with multiple chronic conditions or functional limitations are at significant financial risk. Overall, beneficiaries spent an average of $3,024 per year on out-of-pocket costs. Financial burdens and access gaps highlight the need to approach reform with caution. Already-high burdens suggest restructuring cost-sharing to ensure affordability and to provide relief for low-income beneficiaries.

The Commonwealth Fund used 2 "indicators" in doing the research, the "High total cost burden" and "underinsurance". The issue brief notes that lower-income beneficiaries may have significant out of pocket costs. "When premiums, cost-sharing, and spending on uncovered services are included, more than one-fourth of all beneficiaries (27%)—an estimated 15 million people—and two of five beneficiaries with incomes below 200 percent of the federal poverty level spent 20 percent or more of their income on health care and premium costs in 2016." As far as the other indicator, the Commonwealth Fund found "that one-fourth of beneficiaries are underinsured—that is, they spend at least 10 percent of their total annual incomes on medical care services, excluding premiums. Of beneficiaries with incomes below the poverty level, one-third spent 10 percent or more... Despite having Medicare or supplemental coverage, these people are effectively underinsured." (citations omitted).

The brief concludes with these observations:

Despite the substantial set of benefits that Medicare provides, many beneficiaries are left vulnerable because of financial burdens and unmet needs. As Medicare enters its sixth decade and the baby boom population becomes eligible, the costs of the program will increase, likely placing it on the policy agenda. Despite Medicare’s notable recent success in controlling costs per beneficiary, total spending will increase as the program covers more people.

The high financial burdens documented in this brief illustrate the need for caution. Half of Medicare beneficiaries have low incomes; one-third have modest incomes (200% to 399% of poverty). Any potential policy should first consider the impact on beneficiaries.

Access and affordability remain key concerns. In any discussions of potential Medicare reform, it will be important to pay particular attention to consequences for those vulnerable because of poor health or low income. Indeed, the findings point to the need to limit out-of-pocket costs and enhance protection for low-income or sicker beneficiaries.

As the single largest purchaser of health care in the country, Medicare policies directly influence insurance and care systems across the country. With a projected one-fifth of the population on Medicare by 2024, keeping beneficiaries healthy and financially independent is important to beneficiaries, their families, and the nation. (citations omitted).

http://lawprofessors.typepad.com/elder_law/2017/05/medicare-out-of-pocket-costs-more-than-you-may-think.html

Consumer Information, Current Affairs, Federal Statutes/Regulations, Health Care/Long Term Care, Medicare | Permalink

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