NCPA - National Center for Policy Analysis

Sicker, Older, Poorer -- Spend More Of Income On Health Care

March 7, 2000

Elderly Americans spend on average 19 percent of their total income on out-of-pocket medical expenses annually, with more than half of these payments going toward prescription drugs and dental care, according to a forthcoming study in the Journal of Gerontology.

The study uses data from the 1995 Medicare Current Beneficiary Survey and provides the latest figures available on older people's out-of-pocket expenses. According to the study, which was conducted by Rutgers University researchers:

  • Those in the lowest-fifth income level -- up to $6,720 per capita family income -- spend 32 percent of their total income in out-of-pocket costs for health care, despite Medicaid coverage for some, compared with those in the top tier, who pay less than 9 percent.
  • Seniors whose self-reported health status was "poor," spend 29 percent compared with 15 percent for those in "excellent" self-reported health.
  • Older seniors, age 85 and older, are paying 22 percent compared to 17 percent for those age 65 to 74 years.
  • And those who did not complete high school spend 21 percent compared with 12 percent for college graduates.

Medicare does not cover most outpatient prescription drug costs. The study found that prescribed medication costs have grown to account for 33.9 percent, more than one-third, of the elderly's overall all out-of-pocket payments to health care providers.

Dental services, which are not covered by Medicare and are rarely covered by most insurance plans, accounted for 18 percent of expenses.

Source: "Elderly Americans Spend 19 Percent of Income on Health Care," Journal of Gerontology/MedscapeWire, March 3, 2000.


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