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Report Says Out-of-Pocket Costs for Medicare Beneficiaries Will Keep Growing

February 01, 2018

At a time when the aging population is on the rise in Pennsylvania, a Kaiser Family Foundation (KFF) report estimates that out-of-pocket costs for Medicare beneficiaries are expected to keep rising over the next decade. Findings indicate that those costs will reach half of a senior's income, increasing from the 41 percent of average per capita Social Security income during 2013, to 50 percent by 2030.

Medicare helps pay for the health care needs of 59 million people ages 65 and over and younger people living with permanent disabilities. Half of all Medicare beneficiaries live on annual per capita income of less than $26,200. Out-of-pocket health care costs can pose a challenge, especially for beneficiaries with lower incomes and those with significant medical needs.

Kaiser assessed the current and projected out-of-pocket health care spending burden among Medicare beneficiaries using a broad definition of health care expenses, and in relation to both per capita Social Security and total income.

In its analysis of 2013 numbers, KFF said women paid 44 percent of their per capita income on out-of-pocket costs, which was more than men, who paid 38 percent on out-of-pocket costs. These numbers are expected to increase to 52 percent and 47 percent respectively by 2030.

KFF also found that out-of-pocket health care costs rise as seniors age, especially for people 85 and over. The costs are higher for people in poor health and lower-income Americans.

Premiums, deductibles and other out-of-pocket costs are rising in all health plans. In an October report, KFF found out-of-pocket costs are outpacing wage growth in employer-based plans.

Shifting more health care costs onto individuals could put personal finances in jeopardy, especially for those living on Social Security. High out-of-pocket costs also can affect patients’ health care if they delay or avoid getting care because they can’t afford it. That leads to sicker patients and higher health care costs in the long run.

The scenario creates problems for health care providers as well. Value-based payment programs incentivize providers and hospitals to strive for better outcomes and keep costs down. Hospitals are investing resources in services aimed at helping patients better manage chronic conditions and reducing the need for hospitalizations. Older, sicker patients not able to afford care work against this new model based on wellness and care management.

The state’s senior population is growing at a rate 20 times faster than Pennsylvania’s overall population. By 2025, more than one in five Pennsylvania residents will be 65 or older, according to the U.S. Census and the Pennsylvania State Data Center.

For information about value-based payment programs, contact Kate Slatt, HAP’s senior director, innovative payment and care delivery. If you have questions about HAP’s advocacy efforts to protect Medicare provider payments, contact Laura Stevens Kent, HAP’s vice president, federal legislative advocacy.  

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