AARP: Says Medicare Is Posing Greater Financial Burden
Older Medicare beneficiaries living below the poverty line spend, on average, more than one-third of their yearly income on out-of-pocket health care costs, according to a report released yesterday by the American Association of Retired Persons' Public Policy Institute and the Lewin Group. Medicare beneficiaries of average income spend almost 20% of their income on out-of-pocket health care expenses, according to the study, entitled, "Out-of-Pocket Health Spending by Medicare Beneficiaries Age 65 and Over: 1997 Projections." In real numbers, this finding says that most Medicare beneficiaries spend $2,149, or 19% of their annual income, on medical expenses, while those with incomes below the poverty line spend 35% of their annual income, or $2,714, for an individual with $7,755 in annual income (AARP release, 3/4). The report further found that "high-income recipients spent only 10% of their income on additional medical costs" (Stamper, AP/Philadelphia Inquirer, 3/5). AARP says the report is the first to "look at the magnitude of out-of-pocket spending for the nearly 60% of poor Medicare beneficiaries who do not receive Medicaid." It is also the first study of its kind to provide comparisons between what HMO enrollees and traditional policy holders pay in out-of-pocket expenses (AARP release, 3/4).
Medicare recipients are paying out-of-pocket for "prescription drugs, which aren't covered by [Medicare] and premiums for supplemental 'Medigap' coverage," the Wall Street Journal notes. "For older Americans living on a fixed income, there are tough choices to make -- should I fill my prescription or pay the rent?," said John Rother, AARP's director of legislation and public policy and lead author of the study (3/5). Rother "said the report was intended, in part, to counter the idea that most Medicare beneficiaries could pay substantially more for their health care," the New York Times reports. In addition, the findings also show that "the program is not working very well for those who are most vulnerable," according to Rother.
Message To Breaux
The New York Times notes that the AARP's report is indicative of "the intense lobbying that will swirl around the Medicare commission" appointed by President Clinton. "As Republicans propose ways to trim Medicare spending, Democrats and lobbyists for the elderly say that the current program is inadequate," the Times reports (Pear, 3/5). Rother said the report sends a call to the commission "to move the debate on Medicare away from its financial solvency to how the health care plan can adjust to the changing needs of elderly Americans." AARP's "message is, 'Don't just look at Medicare in terms of solvency and its place in the national budget, but look at it in terms of the family budget.' This program needs to work for average Americans," he said (AP/Philadelphia Inquirer, 3/5).
HMO The Hero
The AARP report also showed that Medicare beneficiaries enrolled in HMOs spend about a third less on out-of-pocket expenses than those enrolled in traditional fee-for-service plans -- $1,775 compared to $2,610 (AARP release, 3/4). "But HMO enrollees were not as shielded from spending a significant portion of their incomes on health care, as experts had predicted years ago," USA Today reports (Findlay, 3/5). "The good news is out-of-pocket costs are one-third lower with HMOs, but the bad news is that the out-of-pocket costs are still high," said Rother. The study found that "[p]oor Medicare beneficiaries enrolled in an HMO used 48% of their yearly incomes for health care costs, while the average HMO member used 16%." About 13% of all Medicare enrollees belong to an HMO while 62% have private supplemental insurance, the St. Paul Pioneer Press notes (Stamper, 3/5). The study is "based on projections from a 1993 survey of 12,000 Medicare beneficiaries" (USA Today, 3/5).
According to the study, "Medicaid is working for those who are enrolled in it, with program recipients using only 8% of their income for out-of-pocket medical expenses." However, AARP Senior Policy Adviser David Gross, said "the 2 million elderly poor who aren't covered by Medicaid are paying 54% of their income in out-of-pocket expenses" (AP/Philadelphia Inquirer, 3/5).