In an issue brief released this month, the Commonwealth Fund examines the risk of high health care costs for a certain segment of the Medicare population. For more than 50 years, Medicare has provided guaranteed health benefits for millions of older adults and people with disabilities. Yet, a significant number of people with Medicare are exposed to high health care costs, with lower income populations being the most at risk.
Original Medicare does not currently limit the amount of out-of-pocket costs a beneficiary can incur for covered services, and the program also excludes certain services like dental, hearing, and long-term care. Consequently, 23 percent of people with Medicare (11.5 million) were “underinsured” in 2013 to 2014. The Commonwealth Fund defines “underinsured” as someone with Medicare in a household that spent 10 percent or more of their income on medical care (excluding premiums) or 5 percent or more for low-income beneficiaries. Additionally, 16 percent of people with Medicare (8 million) spent 20 percent or more of their income on their total health care costs, including insurance premiums and all other medical expenses. The Commonwealth Fund considers this a “high total cost burden.”
According to the report, low-income people with Medicare make up a larger proportion of those who are underinsured or have a high total cost burden. Forty-one percent of low-income people with Medicare were underinsured in 2013 to 2014, which is four times greater than the number of people with higher incomes who were underinsured. Twenty-seven percent of low-income beneficiaries had a high total cost burden compared to only eight percent of higher income beneficiaries.
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