Fwd: qotd: Financial burden on Medicare households

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-------- Original Message --------
Subject: qotd: Financial burden on Medicare households
Date: Mon, 13 Jan 2014 12:53:05 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Kaiser Family Foundation
January 9, 2014
Health Care on a Budget: The Financial Burden of Health Spending by
Medicare Households
By Juliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman

The Medicare program offers health and financial protection to more than
50 million seniors and younger people with disabilities. However, the
high cost of premiums, cost-sharing requirements, and gaps in the
Medicare benefit package can result in beneficiaries spending a
substantial share of their household budgets on health care.

Medicare households devoted nearly 14% of total household spending to
health-related expenses in 2012, on average — a substantially larger
share than non-Medicare households.

Spending on health insurance premiums, including for Part B, Part C
(Medicare Advantage), Part D and supplemental coverage (such as Medigap
and retiree health plans), was about two-thirds (65.4%) of Medicare
households' average health care spending in 2012, and 9.1% of Medicare
household spending overall. Medical services (such as hospital stays,
physician services, lab tests, and X-rays) were the next largest
component of Medicare households' health spending (18.5%), followed by
prescription drugs (13.0%) and medical supplies (3.1%).

The financial burden of out-of-pocket health spending is felt
disproportionately by some subgroups of Medicare households, including
older beneficiaries and those with incomes between 100% and 399% of poverty.

As policymakers consider options to address federal budget concerns,
including policies to rein in Medicare spending, these findings
highlight the importance of assessing the effects of such proposals on
out-of-pocket health care spending among Medicare beneficiaries — a
majority of whom already live on tight budgets.

http://kff.org/medicare/issue-brief/health-care-on-a-budget-the-financial-burden-of-health-spending-by-medicare-households/

****

Employee Benefit Research Institute
October 2013
Amount of Savings Needed for Health Expenses for People Eligible for
Medicare: More Rare Good News
By Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D.

Individuals should be concerned about saving for health insurance
premiums and out-of-pocket expenses in retirement for a number of
reasons. Medicare generally covers only about 60 percent of the cost of
health care services for Medicare beneficiaries ages 65 and older, while
out-of-pocket spending accounts for 12 percent. Furthermore, the
percentage of private-sector establishments offering retiree health
benefits has been falling, and where benefits are offered, they are
becoming less generous. This is true even in the public sector.

Couples at the 90th percentile in drug expenses would need $220,000 to
have a 50 percent chance of having enough money to cover health care
expenses in retirement. They would need $295,000 to have a 75 percent
chance of covering their expenses and $360,000 to have a 90 percent
chance of covering their expenses.

However, it should be noted that many individuals will need more than
the amounts cited in this report because this analysis does not factor
in the savings needed to cover long-term care expenses, nor does it take
into account the fact that many individuals retire prior to becoming
eligible for Medicare.

Finally, issues surrounding retirement income security are certain to
become an even greater challenge in the future, as employers continue to
scale back retiree health benefits and as policymakers begin to
realistically address financial issues in the Medicare program with
solutions that are likely to shift more responsibility for health care
costs to Medicare beneficiaries.

http://www.ebri.org/pdf/notespdf/EBRI_Notes_10_Oct-13_RetSvgs-IRAs.pdf


Comment: The bad news is that out-of-pocket expenses for those on
Medicare are significant and fall disproportionately on older
individuals and those with incomes between 100% and 400% of the federal
poverty level. Although some relief is anticipated with the closing of
the Part D donut hole, the overall burden is expected to increase,
especially with proposed policies that would increase spending on
Medicare insurance premiums.

A far more equitable system would be to completely separate payments for
the financing of health care from the benefits received. That is,
eliminate premiums, deductibles, co-payments and coinsurance and instead
use a single public fund for health care to which individuals contribute
based on ability to pay (i.e, progressive taxes). Then care is accessed
based only on medical need, not on ability to pay.

As long as Medicare remains a separate program exclusively for the
elderly and for individuals with long term disabilities, we are going to
see efforts made to try to limit federal spending on Medicare, passing
more costs onto the beneficiaries. Increases in premium revenues is
quite likely, not only for Part B and Part D of Medicare, but also for
private Medigap, Medicare Advantage, and retiree health plans. Also,
proposed taxes on Medigap premiums are on the agenda.

Both of today's articles demonstrate that the burden is already too
great, especially for the majority who are on tight budgets. Rather than
shifting yet more responsibility for health care costs onto the backs of
Medicare beneficiaries, we should be reducing it. If we were all in this
together, as we would be with an improved Medicare for all, we would be
demanding relief from excessive out-of-pocket costs while begrudgingly
paying our taxes.