Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future | The Henry J. Kaiser Family Foundation

Introduction

• Average out-of-pocket cost for Medicare beneficiaries are expected to keep rising over the next decade when it will reach half of a senior's income. 
• The Kaiser Family Foundation estimated that out-of-pocket costs will increase from 41% of average per capita Social Security income in 2013 to 50% by 2030.
• In its analysis of 2013 numbers, KFF said women paid 44% of their per capita income on out-of-pocket costs, which was more than men, who paid 38% on out-of-pocket costs. That’s expected to increase to 52% and 47% respectively 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. Yet, people with Medicare can face significant health-related out-of-pocket costs, including premiums, deductibles, cost sharing for Medicare-covered services, and costs for services Medicare does not cover, such as long-term services and supports and dental services. With half of all Medicare beneficiaries living on annual per capita income of less than $26,200, out-of-pocket health care costs can pose a challenge, particularly for beneficiaries with modest incomes and those with significant medical needs.

As one way of measuring health care affordability for people with Medicare, each year the Medicare Trustees estimate Medicare Part B and Part D premiums and cost sharing as a share of average Social Security benefits. This estimate, however, does not include other health-related costs, such as out-of-pocket spending on hospital and skilled nursing facility stays, supplemental insurance premiums, and costs for services not covered by Medicare. The estimate also does not include income from sources other than Social Security.

In this analysis, we assess 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. Our results suggest that rising health care costs pose significant affordability challenges for many people on Medicare today, particularly those with relatively low incomes who derive most of their income from Social Security, and that this burden can be expected to grow in the future. This analysis sets the context for understanding the implications of potential changes to Medicare, Medicaid, or Social Security that could shift more health care costs onto beneficiaries or reduce their future retirement income.

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Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future

Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future | The Henry J. Kaiser Family Foundation