June 28, 2005
Tuesday

Older Americans are increasingly reaching their Medicare years already in the hole from medical costs, and many more are concerned that they won't be able to handle the widening gap between what Medicare pays and what's left to seniors.

A new national survey of 2,000 Americans aged 50 to 70 done for The Commonwealth Fund found that they are "becoming much less protected from rapidly rising health costs," said Sara Collins, a program officer with the New York-based foundation that sponsors research on health and social issues.

Percent of Americans aged 50 to 70 who say they Have a chronic medical condition - 70% Have annual out-of-pocket medical expenses between $1000 and $5000 - 22% Don't get needed health care because of cost concerns - 24% Have trouble with medical bills - 35% Did not have health insurance before they went on Medicare - 24% Are "very satisfied" with their health care - 54% Source: "Will You Still Need Me? The Health and Financial Security of Older Americans" - The Commonwealth Fund, June 2005

Among the findings from the survey released Tuesday:

- Thirty-five percent said they had a problem paying their medical bills in the past year or were still paying off a medical debt up to three years old.

- Some 12 million older adults are either uninsured or have a history of unstable coverage, and 24 percent of those who were on Medicare said they had been uninsured before entering the federal insurance program for the elderly and disabled.

- Fifty-three percent of those who were still working or had a working spouse said they would have no job-based health benefits when they retire. Only about 10 percent of all employers and 20 percent of large employers still provide any retiree health coverage.

- Twenty-four percent of adults 50 to 64 said the high cost of health care has deterred them from filling a prescription, seeing a doctor when needed, or getting a medical test or follow-up treatment.

- Three out of five said they are "very" or "somewhat" worried that they will not be able to afford health care in the future.

Collins said the phone survey, done last fall, captured concern about meeting medical expenses among older people at all income levels, ethnic background and political affiliation.

Although the 7 percent of older Americans who bought private health coverage on their own tend to be healthier and more affluent than their peers, a quarter of those 50 to 64 were spending $6,000 or more a year for coverage, and two of five still had annual deductibles higher than $1,000.

John Rother, director of policy and strategy for AARP, noted that the report "may actually be understating this problem for the most vulnerable seniors who are older than 70 and have the highest expenses.

"But even for the baby boomers, who have been perceived as better off than their parents, the survey shows grounds for alarm as they face a future of declining pensions and health benefits in retirement, and a Medicare program where out-of-pocket expenses are going ever higher."

Dallas Salisbury, president of the Employee Benefit Research Institute in Washington, pointed to a study his organization did last year that showed a person retiring at 65 and living to 80 will need $108,000 in savings just to meet medical costs not covered through Medicare. The figure rises to $300,000 if that person lives to age 95.

Yet the survey showed that 48 percent of those 50 to 70 have retirement savings of less than $50,000 and about two out of five have a nest egg of less than $25,000.

One idea that has been suggested to help "pre-retirees" with little or no health coverage bridge the gap to retirement is allowing people in their 50s and early 60s to buy into the Medicare program early. Three quarters of those aged 50 to 64 said they would be interested in such an option, although other studies suggest the annual premiums for the coverage would have to be subsidized to be affordable for lower-income people.

Another option, espoused by Commonwealth Fund Karen Davis and others, would be to set up Medicare health savings accounts that would let middle-aged workers put aside 1 percent of their wages in a fund that could be tapped to cover out-of-pocket health expenses in retirement. Sixty-nine percent of those surveyed endorsed that idea, particularly those in their 50s.

"It's clear older Americans are anxious for policy solutions that would improve their ability to protect against the high cost of medical care and make it easier to increase their retirement savings," said Davis, adding that more analysis needs to be done to see if such accounts would be effective and what incentives, such as tax exemptions, might be needed to get large numbers of people to actually save.

On the Net:

www.cmwf.org

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