Urban Institute Study: Out-Of-Pocket Medicare Expenses Will Rise
January 12, 2001
The amount of money seniors and other Medicare beneficiaries pay out-of-pocket for health care is expected to rise drastically over the next 25 years, with some groups projected to spend more than 70 percent of their personal income simply to meet costs Medicare does not cover, according to a report by the Urban Institute.
Experts warn that new safeguards and more money will be needed to insure seniors against overwhelming personal losses as both health care costs and the elderly population expand.
The amount of money that some Medicare beneficiaries will pay will be almost untenable. For instance:
- Annual out-of-pocket costs are projected to rise from $3,142 per Medicare beneficiary today to $5,248 in 2025.
- Seniors, who on average now devote 22 percent of their annual income to health costs, will pay 30 percent in 25 years.
Hardest hit will be low-income elderly women who are in poor health. Their costs are expected to rise from 52 percent of their yearly income today to nearly 72 percent in 2025. The figures do not include money seniors may spend to buy prescription drugs at retail prices.
The rise will occur mainly because of increasing across-the-board health care costs as well as escalating premiums for private supplemental insurance programs like MediGap.
Still, Medicare will not have enough money to cover a Medicare population projected to explode from 39 million today to nearly 70 million by 2025.
Source: Stephanie Maxwell, Marilyn Moon and Misha Segal "Growth in Medicare and Out-of-Pocket Spending: Impact on Vulnerable Beneficiaries," December 2000, Urban Institute, 2100 M Street, N.W., Washington, D.C. 20037, (202) 833-7200.
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