Out-of-pocket spending by Medicare beneficiaries is eating significant holes in elders’ incomes even as the federal government has denied cost-of-living increases in Social Security benefits for two years in a row.
An AARP Public Policy Institute report released this week shows median out-of-pocket Medicare spending reached $3,103 a year in 2006. The report says researchers at the University of Maryland School of Pharmacy based findings on data from the most recent Medicare Current Beneficiary Survey.
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The research concluded that 10 percent — more than 4 million people — of those receiving Medicare benefits spent more than $8,300 of their own money on health care per year. That translates to about 25 percent of income for the oldest and poorest Medicare patients.
Median spending for people with cancer, congestive heart failure or Alzheimer’s disease also was about 25 percent of income.
The study included spending on Medicare Part B, which covers care such as doctors’ services, outpatient care and home health services, and premiums for supplementary Medigap policies carried by more than 90 percent of beneficiaries.
Three-quarters of the out-of-pocket spending in 2006 were for nursing home costs, prescription drugs and care providers. The figures do not include spending on prescription drugs or Medicare Part D drug premiums, which have been available only since 2006.
At the time, Medicare didn’t cover any dental, vision or hearing services. The study found only 40 percent of beneficiaries saw dentists and about 30 percent used vision or hearing services.
Median out-of-pocket spending for long-term health care facilities was $7,611 annually, with 10 percent of beneficiaries spending at least $41,900 for room-and-board or long-term care, most likely because they were spending down assets in order to qualify for Medicaid, the study found.
While policymakers are considering a $5,250 annual Medicare out-of-pocket spending cap, AARP says that would help fewer than 10 percent of beneficiaries and would have no effect on what people pay for medical services Medicare doesn’t cover. The organization suggests the cap should be combined with more help for low-income subscribers.
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