Out-of-pocket health spending by poor and near-poor elderly Medicare beneficiaries

Objective. To estimate out-of-pocket health care spending by lower-income M edicare beneficiaries, and to examine spending variations between those who receive Medicaid assistance and those who do not receive such aid. Data Sources and Collection. 1993 Medicare Current Beneficiary Survey (MCBS ) Cost and Use files, supplemented with data from the Bureau of the Census (Current Population Survey); the Congressional Budget Office; the Health Ca re Financing Administration, Office of the Actuary (National Health Account s); and the Social Security Administration. Study Design. We analyzed out-of-pocket spending through a Medicare Benefit s Simulation model, which projects out-of-pocket health care spending from the 1993 MCBS to 1997. Out-of-pocket health care spending is defined to inc lude Medicare deductibles and coinsurance; premiums for private insurance, Medicare Part B, and Medicare HMOs; payments for non-covered goods and serv ices; and balance billing by physicians. It excludes the costs of home care and nursing facility services, as well as indirect lax payments toward hea lth care financing. Principal Findings. Almost 60 percent of beneficiaries with incomes below t he poverty level did not receive Medicaid assistance in 1997. We estimate t hat these beneficiaries spent, on average, about half their income out-of-p ocket for health care, whether they were enrolled in a Medicare HMO or in t he traditional fee-for-service program. The 75 percent of beneficiaries wit h incomes between 100 and 125 percent of the poverty level who were not enr olled in Medicaid spent an estimated 30 percent of their income out-of-pock et on health care if they were in the traditional program and about 23 perc ent of their income if they were enrolled in a Medicare HMO. Average out-of -pocket spending among fee-for-service beneficiaries varied depending on wh ether beneficiaries had Medigap policies, employer-provided supplemental in surance, or no supplemental coverage. Those without supplemental coverage s pent more on health care goods and services, but spent less than the other groups on prescription drugs and dental care-services not covered by Medica re. Conclusions. While Medicaid provides substantial protection for some lower- income Medicare beneficiaries, out-of-pocket health care spending continues to be a substantial burden for most of this population. Medicare reform di scussions that focus on shifting more costs to beneficiaries should take in to account the dramatic costs of health care already faced by this vulnerab le population.