Examining the Effects of Health Care Debt Among the Elderly – Center for Medicare Rights

Despite the great success of Medicare, the out-of-pocket costs of the program are difficult for many and medical bills are very common.

Medicare’s benefit structure and lack of financial protections expose beneficiaries to frequent and high costs. Enrollees contribute funds to provide their coverage through income taxes, premiums, deductibles, and other shared funds. Many also pay for prescription drug coverage, supplemental insurance, and services that Medicare does not cover, such as comprehensive dental, vision, and hearing care. Although Medicare Advantage (MA) registers out-of-pocket costs, that ceiling, which will be $9,000 in 2024, is one of the 95% of beneficiaries who are not expected to meet. Our research and experience show cost challenges persist across the board, often with disastrous results. For example, a recent study from The Commonwealth Fund revealed similar proportions of people with Original Medicare (OM) and MA who skipped care because they could not afford it, and that although many beneficiaries with medical debt, some MA enrollees were more likely than those with financial difficulties. OM to do so.

A recent KFF article examines the issue of medical debt in more detail, uncovering findings from the 2022 KFF Health Care Debt Survey on the prevalence and impact among Medicare beneficiaries age 65 and older.

More than one in five adults 65 and older (22%) reported having debt for their own or someone else’s medical or dental expenses. The debts that caused their debt were mostly for routine services, such as lab fees and diagnostic tests (49%), dental care (48%), doctor visits (41%) , and prescription drugs (24%).

These findings highlight the importance of providing comprehensive information to all enrollees. Medicare’s lack of comprehensive dental coverage is a clear driver of beneficiary debt. Although some MA plans offer oral health benefits, “the level of coverage varies greatly, and enrollees may still have significant out-of-pocket costs for these services.” Creating a stronger oral health benefit under Medicare Part B would promote access to affordable dental care for OM and MA enrollees. Likewise, program-wide beneficiary protections, such as meaningful out-of-pocket coverage and substantial financial assistance, as well as program integrity changes, such as reduced payments many in the hospital’s inpatient departments and MA plans, are needed to lower costs for Medicare beneficiaries. , and taxpayers.

This reported health care debt takes many forms, including money owed to suppliers (12%), credit card companies (11%), collection agencies (8%), banks or other lenders (7%) and family or friends (3%).

It also varies widely: About 40% of Medicare-aged adults with health care debt owe less than $1,000 and one in ten owe $10,000 or more.

Even very small debts can have lasting effects. About 30 percent of beneficiaries with unpaid medical or dental bills have contacted a collection agency, and 23 percent say their health care debt affects their credit score. bad credit.

Half of all people with Medicare live on $36,000 or less a year and one in four have less than $17,000 in savings. For children and other beneficiaries, reversing bad credit changes can be very difficult, making it difficult for them to recover financially or find affordable credit in the first place. In addition to adopting payment rates, safety rules, and cost protection that improve Medicare’s efficiency and reduce medical debt, policymakers must also reduce the fallout when it occurs. Here, KFF notes that the Consumer Financial Protection Bureau (CFPB) “recently proposed legislation that would remove health care debts from most credit reports and prevent lenders from making credit decisions based on medical information, with the goal of reducing the health care burden for US seniors and protection against forced credit reporting.” This would be an important step in the right direction.

For many with health-related debt (62%), financial uncertainty has caused them to avoid or delay care because of the cost. Forty-eight percent delayed medical appointments, 31% did not get tests or treatments recommended by a doctor, and 28% did not take prescription medications as prescribed.

Another use also changed. Two in five (42%) have cut back on household goods, food, or clothing; 39% have exhausted all or most of their savings; 31% increased their credit card balance for a non-medical purchase; and one in five took out a loan (21%) or defaulted on other debts (18%).

The Commonwealth Fund’s 2022 survey captured similar experiences. Among Medicare enrollees with medical debt, 18 percent said it made it difficult to pay for basic necessities, such as food and rent, and 28 percent said it caused them to spend all or most of their money. of their savings. KFF recognizes that such sacrifices can have negative impacts on beneficiaries’ health outcomes, financial stability and well-being. They may also perpetuate health care debt by leaving seniors with fewer resources to pay for future health and medical expenses.

The report is a stark reminder that the consequences of medical debt are serious and lasting. It can reduce beneficiaries’ ability to pay for medical care and daily expenses, damaging their health and financial security. Unpaid medical bills also cause emotional and financial stress, putting people into collections and lowering credit scores. For many people with Medicare who live on fixed or limited income, this can be very difficult to reverse. Many may experience financial insecurity—unable to cover current expenses, meet current needs, or save for the future.

Beneficiaries who cannot afford regular or special care may need. This can lead to poor outcomes and quality of life. It can also increase Medicare costs, as they may require more expensive interventions later such as emergency department or hospice care.

These categories may exacerbate health care disparities. Previous CFPB research shows that beneficiaries with medical billing issues are more likely to be adults of color, to be in good health, to have other debts, and to have an income between 100 and 200% of the federal poverty level. In a baseline study, KFF found that “low-income and people of color (particularly Black adults), are more likely than their counterparts to report experiences such as contact with collection agencies because of health care debt, being denied follow-up care, and making difficult sacrifices such as changing their living conditions to pay off their debt.”

Medicare provider liability issues have implications for policymakers. Importantly, the Affordable Care Act takes important steps to lower beneficiary and Medicare costs, including expanding eligibility for full Part D Low Income Assistance, capping Part D enrollees’ spending , reducing monthly insulin charges, and making additional injections available free of charge; The Medicare negotiation program is expected to reduce costs. However, KFF’s findings shed light on important affordability barriers that remain, and that must be addressed to ensure that all people with Medicare can build and maintain their health. beautiful.

Read the KFF report, What Are the Effects of Health Care Debt Among the Elderly?

Read more from Medicare Rights about Medicare provider costs and solutions.