Medicare recipients spend more on health care than people with other types of insurance. One-quarter struggle to pay their premiums. For more than one-third, the extra costs of a hospital visit create persistent stress about their finances or financial precarity, causing some to delay needed care. Policymakers and insurers want to address the issue but questions remain about the best way to identify those who need help and how much help to give them.
In an Annals of Internal Medicine study, Penn LDI senior fellows and associate professors in the Perelman School for Medicine Paula Chatterjee and Eric Roberts and their colleagues sought to understand the scope of financial precarity among Medicare recipients when they need to cover the out-of-pocket cost of a hospital visit.
They gathered data from a representative sample of Medicare-enrolled respondents with income between 100% and 400% of the federal poverty level selected from the 2018 Health and Retirement Study. Then they estimated the percentage of people who would be unable to pay the Part A Medicare deductible ($1,600) for a hospital stay.
The potential for financial hardship from hospitalization existed at all asset levels and was greater among beneficiaries who were Black and Hispanic, chronically ill, and with lower educational attainment.
The amount of financial stress changed depending on how the researchers assessed peoples’ financial resources (e.g., balances in checking and savings accounts vs. all liquid assets), if they considered the need to reserve funds for future living costs, and whether members had supplemental insurance.
In all situations, the proportion of beneficiaries facing financial precarity from the Part A hospital deductible exceeded 30%. Specifically, 45% of beneficiaries had insufficient balances in checking and savings accounts to cover the deductible. Additionally, 34.6% had insufficient balances in checking and savings accounts and lacked supplemental insurance, and 50.7% did not have sufficient liquid assets to pay while also maintaining a minimum financial reserve to cover future living expenses. Less than 40% had insufficient liquid assets while maintaining a reserve for future living costs and lacked supplemental insurance.
The findings show that older adults at the same modest income level may not have a similar ability to pay for hospitalization. Additionally, there are racial and socioeconomic disparities in the risk of financial hardship due to such expenses.
This story is by Christine Weeks. Read more at Penn LDI.
