Out-of-pocket health care costs among older Americans

Objectives. Despite Medicare, elderly persons are exposed to substantial ou t-of-pocket health care cost burdens. As Medicare reform proposals are cons idered, it is important to determine the current size, distribution, and bu rden of these expenditures. Methods. Data From the 1995 Medicare Current Beneficiary Survey were used t o analyze out-of-pocket expenditures and their burden in relation to income ; the proportion of total health care expenditures paid out-of-pocket; and the role of pharmacy, hospital, physician, and other services in overall ou t-of-pocket spending. Results. Expenditures averaged 19.0% of income, for full-year Medicare bene ficiaries alive during all of 1995. In bivariate analyses, higher-burden su bgroups included those in poor health (28.5% of income), older than age 85 (22.4%), and with income in the lowest quintile (31.5%, despite Medicaid co verage for some). Those relying on fee-for-service Medicare only (23.0%) or with self-purchased supplemental insurance (25.5%) experienced more burden than those with employer-sponsored coverage or in HMOs. In multivariate an alyses, functional impairment, number of medical conditions, self-perceived health and privately-purchased supplemental coverage were each associated with higher out-of-pocket burden, while HMO participation was associated wi th lower burden. Out-of-pecker expenditures averaged 15.2% of total health care expenditures with the proportion highest (22.6%) for those with no sup plemental coverage. More than half of out-of-pocket payments for health car e services were for prescription drugs and dental services. Discussion. Out-of-pocket cost burdens fall most heavily on those with chro nic health conditions and without employer-subsidized supplemental coverage or Medicaid. Impact of Medicare reform proposals on these subgroups needs to be carefully evaluated.