Thinking About Health: High health care costs pinch seniors’ budgets
January 31, 2014
If you ask Washington politicians or policy wonks to describe Americans older than 65, many would likely use the term "greedy geezers." You know, the stereotype of seniors living on gobs of money from their CDs, stock dividends and Social Security benefits and cruising the Caribbean.
That sentiment is so widespread that a year ago, Goldman Sachs CEO Lloyd Blankfein said on the CBS Evening News "You're probably going to have to do something to lower people's expectations — the entitlements and what people think they're going to get. Because they're not going to get it." Blankfein, who earned $26 million in 2012, was talking about Social Security, and in effect he was telling viewers they had to learn to live on less because the U.S. could no longer afford to pay generous Social Security benefits, especially decent cost-of-living increases.
He didn't give details on camera, nor did the CBS correspondent pursue them. Last week, two new reports offered a window into the budgets of America's seniors and put Blankfein's remarks in the context of reality. The vast majority of people older than 65 and older, as well as people with disabilities, live on modest, fixed incomes, and health care costs are eating up their finances.
Complicating matters further, some help may be available to them, but most people don't know it's there.
The median annual household income for seniors is $34,000, and it's just less than $30,000 for people living on Social Security disability benefits. Looking at the statistics another way, half of all people with Medicare live on annual incomes of $23,500 or less; one-quarter have incomes below $14,400. Both reports found that even with Medicare, high health care costs are eating up a substantial portion of those incomes, as Medicare beneficiaries know all too well.
The advocacy group Social Security Works analyzed Medicare data and calculated that out-of-pocket health care expenses have outpaced Social Security cost-of-living adjustments by more than one-third since 1992. And seniors' spending on Medicare premiums, deductibles, copays, premiums for Medigap policies and services not covered have gone up 34 percent from 1992 to 2010.
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The Medicare Rights Center, a New York City advocacy group that runs a helpline available to Medicare beneficiaries from across the country, had some numbers of its own that bolster these findings.
Twenty-one percent of the more than 14,000 helpline callers in 2012 had trouble affording their care and coverage.
They weren't just people with traditionally low incomes, says Joe Baker who heads the Medicare Rights Center. "They are middle-class folks who are just stretched out."
I asked Baker what specifically was making it hard for seniors to afford health care. He said it's mainly the drug benefit itself with its ever-increasing copayments and coinsurance that seniors have to pay at the pharmacy. Sometimes pharmacies simply deny coverage because a drug is not on the health plan's formulary so it's not covered. One helpline caller said he had to leave his mother's medicines at the counter because he couldn't afford the $400 he was asked to pay for them.
Studies show that when patients must pay more out of pocket for their medicines, many stop taking them or don't use them as directed, which, of course, impacts their health.
Baker also said that health services such as dental care, which Medicare doesn't cover as well as more expensive premiums for Medigap policies and higher coinsurance amounts on Medicare Advantage plans are taking a bigger chunk out of family budgets.
All this adds up to a pretty bleak picture that's not likely to improve unless health costs decline, or at least stop rising so fast, or unless Congress takes steps to lower Medicare's drug costs. It could, for example, allow Medicare to negotiate drug prices with the drug companies as the government does on behalf of the Veterans Affairs health system. The law that gave seniors the drug benefit known as Part D, however, forbids Medicare from doing that.
Or Congress could require drug companies to pay rebates when the price of brand-name drugs rises faster than inflation, a provision that's already a part of the Medicaid program, where rebates have lowered the price of 100 common brand drugs by 45 percent, according a report from the Department of Health and Human Services. Opposition from the drug industry keeps that from happening.
Until Medicare is able to push back against drug company opposition, seniors with low incomes can get help from several government programs that subsidize some costs beneficiaries have to pay. The Medicare Rights Center says these programs are underused largely because people don't know about them.
You apply in your state. To learn about these programs call 1-800-Medicare or contact your State Health Insurance Assistance Program using this link https://shipnpr.shiptalk.org/shipprofile.aspx. Counselors can explain these programs and determine whether you're eligible.
The Rural Health News Service is funded by a grant from The Commonwealth Fund and distributed through the Nebraska Press Association Foundation, the Colorado Press Association and the South Dakota Newspaper Association.