Medicare Costs Continue to Rise, With the Elderly Shouldering the Brunt of Expenses

NEW YORK (MainStreet) — The costs of Medicare continue to rise, according to a new report by the Kaiser Family Foundation (KFF). This is bad news for the 54 million senior citizen beneficiaries and those younger adult beneficiaries who qualify for Medicare due to permanent disabilities.

In 2010, the most recent year for which data was available, the average traditional Medicare beneficiary spent $4,734, up from $3,293 in 2000. Not surprisingly, out-of-pocket spending on medical appointments rose as beneficiaries developed illnesses, chronic conditions, and impairments. Those 85 years and older paid close to double the 2010 average (an average of $8,574 for women and $7,399 for men).

This increase could cause a tight squeeze in budgets for these beneficiaries. Half of those who are covered by Medicare had incomes of less than $23,500 in 2013.

Medicare covers hospitalizations, doctor visits, and medication, but beneficiaries typically pay for premiums for Part B (doctor visits) and Part D (drugs). Unlike other major medical insurance policies, Medicare does not have a cap on beneficiaries' annual out-of-pocket costs. This is especially troublesome for people who have hospital stays in excess of 60 days, after which they must pay a copay of $304 a day, which rises to $608 a day for days 91 to 150, after which beneficiaries must foot the entire bill. Further, Medicare doesn't cover aide services to help with activities of daily living, which many people who are disabled need to live at home. Nor does it pay for routine vision or dental care, nor eyeglasses or dentures or hearing exams or hearing aids. While it does cover scooters, Medicare does not cover lift chairs to get seniors to their bedrooms in multi-level homes, nor does it cover rides to doctor visits for patients who are not able to walk and who must take medical transportation. And it doesn't pay for long-term rehabilitation at a skilled nursing facility than runs longer than 100 days. Coverage for in-home maintenance therapies, despite the Jimmo vs. Sebelious settlement, remains elusive.

Prior research by KFF documented that many beneficiaries carry a significant healthcare financial burden even when they carry supplemental insurance.

To conduct its analysis, KFF used data from the Medicare Current Beneficiary Survey (MCBS) Cost and Use file from 2000 to 2010, which is the most recent data available. The MCBS does not include data on personal care services and supports (home health aides), which can be cost tens of thousands of dollars a year and in some cases reach well into the six figures for 24-hour care. Therefore, these expenses are not included in KFF's estimate for out-of-pocket spending for home health services. The analysis also excludes the 10.8 million people enrolled in Medicare Advantage plans due to unreliable data.

The good news is that the growth rate in out-of-pocket spending (which includes premiums and medical appointments) slowed in 2007. Between 2000 and 2006, total out of pocket spending grew at an average annual rate of 5% but dropped to 1.8% between 2006 and 2010.

- Written by S.Z. Berg for MainStreet

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