Medicare Households Spend More on Health Care Than Other Households

There are 65 million adults covered by Medicare, including 57 million adults age 65 and older, and about 8 million adults under age 65 with disabilities. Although the majority of Medicare beneficiaries (91%) give an overall positive evaluation of Medicare coverage, issues related to medical costs are not uncommon. Medicare beneficiaries contribute to the cost of medical insurance through monthly premium payments, deductibles, and other cost-sharing requirements. In addition, people with Medicare may be eligible for Medicare Part D prescription drug coverage, Medicare Advantage coverage, and supplemental premiums. In addition, traditional Medicare does not limit beneficiary copayments, and beneficiaries often have copayments for services not covered by traditional Medicare, such as dental, hearing, and vision services.

This analysis compares households with all members covered by Medicare (referred to as Medicare households) and households with no members covered by Medicare (referred to as non-Medicare households) to reduce the financial burden of health care costs. Evaluate. About the 2021 Consumer Expenditure Survey data. (look method Learn more about our analytics here. )

Medicare households will pay twice as much as non-Medicare households in 2021

The average health care spending accounted for 15% of total Medicare household spending, compared to 7% for non-Medicare households.

Medicare households spent more on health care than non-Medicare households, both as an annual amount and as a percentage of total household expenditure. Medicare households spent an average of $6,557 on health care, representing 15% of total household spending ($44,686), while non-Medicare households spent $4,598 on health care, representing 7% of total household spending ($67,769). (Fig. 1). Medical expenses include health insurance premiums, medical services (such as hospital and doctor services), prescription drugs, and medical supplies (such as crutches, glasses, and hearing aids).

Medicare households pay more for health care than non-Medicare households because Medicare households have a lower average total household expenditure than non-Medicare households and more medical use, resulting in higher health care costs for Medicare households. This is due to both factors.

Across all spending categories, housing spending represents the largest share of household spending for both Medicare and non-Medicare households, more for Medicare households (37%) than for non-Medicare households (33%). it was high. Although the share of total Medicare household spending spent on transportation (13%) is smaller than that of non-Medicare households (17%), both Medicare and non-Medicare households spent a similar percentage on food. (both 15%). Other expenditures (education, clothing, etc.) were on average smaller as a percentage of total expenditure for Medicare households (21%) than for non-Medicare households (28%).

One in three Medicare households will spend 20% or more of their total household expenditure on healthcare-related expenses in 2021, compared to one in 14 non-Medicare households.

Consistent with the higher health care burden for Medicare households compared to non-Medicare households, 1 in 3 (32%) of Medicare households have We spent more than 20% of our total spending on healthcare-related expenses. ) non-Medicare households. Three of her four in Medicare households (75%) spent 10% or more of her total household expenditure on health care, compared to one in four of her in non-Medicare households (26%). was (Fig. 3).

Conclusion

As measured by average health care as a percentage of household spending, Medicare households will have twice as much health care as non-Medicare households in 2021, with one in three Medicare households spending at least 20% of their household budget. increase. About healthcare. Her 2021 health spending data for both Medicare and non-Medicare households could be lower than what would have been expected had it not been for the COVID-19 pandemic. Usage and spending It plunged in 2020 due to the pandemic and continued to fall below expectations in 2021. In addition, the analysis underestimates the health care burden of households that incur long-term care facility costs because consumer spending surveys do not include people who: I live in a facility. This exclusion is likely to affect spending burden estimates for Medicare households more than for non-Medicare households, since spending on long-term care facilities is a large percentage of Medicare participants’ average out-of-pocket health care costs.

With healthcare usage increasing with age and incomes declining as we retire, it’s no surprise that Medicare households have a higher health care burden. However, this cost burden affects policy discussions such as cost burden and premium levels in Medicare. In recent years, policies have been proposed aimed at improving the financial protection of Medicare beneficiaries. The recently enacted Control Inflation Act of 2022 includes several provisions that reduce prescription drug costs for Medicare participants, including caps on out-of-pocket costs for Medicare beneficiaries under Medicare Part D benefits. $35 monthly limit on insulin costs under Medicare Part B and D. and expanded eligibility for the full Part D low-income subsidy. Policy makers can help Medicare beneficiaries by expanding income eligibility criteria for the Medicare Savings Program or adding out-of-pocket limits so that more people qualify for these financial assistance. Other proposals to improve the affordability of health care are also being considered. About the cost of benefits covered by traditional Medicare. Adopting such changes, however, would require additional federal spending.