Health Care Is Expensive, Even for Those on Medicare

We like to think that Medicare is an incredibly comprehensive health care insurance program that protects seniors from financial hardship due to health related issues. But what are out-of-pocket costs for the elderly? A new study in the Journal of General Internal Medicine examined just that:

BACKGROUND

A key objective of the Medicare program is to reduce risk of financial catastrophe due to out-of-pocket healthcare expenditures. Yet little is known about cumulative financial risks arising from out-of-pocket healthcare expenditures faced by older adults, particularly near the end of life.

DESIGN

Using the nationally representative Health and Retirement Study (HRS) cohort, we conducted retrospective analyses of Medicare beneficiaries’ total out-of-pocket healthcare expenditures over the last 5 years of life.

PARTICIPANTS

We identified HRS decedents between 2002 and 2008; defined a 5 year study period using each subject’s date of death; and excluded those without Medicare coverage at the beginning of this period (n = 3,209).

MAIN MEASURES

We examined total out-of-pocket healthcare expenditures in the last 5 years of life and expenditures as a percentage of baseline household assets. We then stratified results by marital status and cause of death. All measurements were adjusted for inflation to 2008 US dollars.

We all know that end-of-life care is expensive. This study looked at the last 5 years of people’s lives on Medicare, specifically at out-of-pocket spending. The average amount spent in those years was $38,688 for individuals, and more than $51,000 if the subject was part of a couple. However, there was a skew in the data. The median amounts of spending were $22,885 for individuals and $39,759. This means that a number of people spent a whole lot of money. In fact, ten percent of both individuals and spouses spent upwards of $90,000 on health care in the last five years of life.

That’s out-of-pocket. That’s on Medicare.

For individuals, the amount spent was more than baseline household assets for one in four people. More than two in five individuals spent more than the value of their non-housing assets.

Health care is amazingly expensive in the United States. There are days I don’t know what else to say.

[Cross-posted at The Incidental Economist]