Despite Medicare, Low-Income Seniors Feel the Pain of Rising Medical Costs

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Medicare beneficiaries can expect to shell out a greater percentage of their income for out-of-pocket health costs in the future, according to a new study by the non-partisan Kaiser Family Foundation.

The study, released Friday, predicts that by 2030, 42 percent of traditional Medicare beneficiaries nationwide will spend at least 20 percent of their income on health costs. The study found that 36 percent of traditional Medicare beneficiaries spent at least 20 percent of their income on health costs in 2013.

“The financial burden of health care can be especially large for some beneficiaries, particularly those with modest incomes and significant medical needs,” said the study, titled “Medicare Beneficiaries Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future.”

The breakdown for California or other states was not included. California has 5.6 million Medicare beneficiaries – the most of any state.

Medicare, which covers 59 million people nationwide, is the federal health insurance program for people who are 65 and older as well as some younger people with disabilities and end-stage renal disease. It is funded by a payroll tax and is for people who have worked and paid into the system.

Jen Flory, a health policy advocate for the Western Center on Law & Poverty in Sacramento, said she wasn’t surprised by the study’s findings about rising out-of-pocket costs.

“Many lower and middle-income people have a hard time affording costs associated with Medicare, particularly those who don’t qualify for dual eligibility with Medi-Cal,” she said. Medi-Cal is the name in California for the federal Medicaid program, which funds low-income residents.

People covered by Medicare must still use their own money for premiums, deductibles and cost-sharing. Many services are not covered, including long-term care, most dental care, eye exams and hearing aids.

Because of skyrocketing health costs, Medicare has become less effective at keeping seniors out of poverty than it did in the past, Flory said. Proposals at the federal level to cut back on Medicare funding are particularly alarming, she said. “It goes back on a basic contract we have with Americans that if they pay into Medicare their whole working life, they will be taken care of later,” Flory said.

Anthony Wright, executive director of the California advocacy group Health Access, said the study highlights that even though people have insurance, they still end up with high costs.

“Medicare is a venerated and popular program because everybody knows they have some basic level of coverage but it actually has fairly high cost sharing,” he said. “People still end up with significant medical bills even as it does prevent against some of the worst bills.”

The Kaiser study also found that Medicare beneficiaries’ average out-of-pocket health care spending amounted to 41 percent of the average per-capita Social Security income in 2013. That percentage was even higher for women and people 85 and older.

Half of beneficiaries in traditional Medicare spent at least 14 percent of their per capita income on health costs in 2013, the study found. The burden of health costs was higher for people 85 and older, in poor health and with modest incomes.

Seniors have to make difficult choices about whether to buy supplemental Medicare insurance with higher premiums and more coverage or to get traditional Medicare with lower premiums but higher costs for services.

Tatiana Fassieux, board chair of California Health Advocates, a nonprofit focused on Medicare advocacy and education, is facing the higher out-of-pocket Medicare costs herself. She is 69 and lost half her income when she became a widow.

“I know that both for my lifestyle and just to keep my experiences going, I’m still working,” she said. “Many seniors are considering going back into the workforce just to afford increase health care costs.”

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