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Risk for Financial Precarity From Hospitalization: Implications for Targeting Financial Assistance in Medicare
Paula Chatterjee1, Eliza Macneal2, Syama R Patel2
1Department of Medicine, University of Pennsylvania Perelman School of Medicine, and Leonard Davis Institute of Health Economics, University of Pennsylvania, Philadelphia, Pennsylvania (P.C., E.T.R.).
Insights
Many Medicare beneficiaries face financial hardship due to out-of-pocket costs. Nearly half of those with incomes between 100-400% of the poverty level lack funds for the Medicare Part A deductible.
Area of Science:
- Health Economics
- Gerontology
- Public Health
Background:
- High out-of-pocket (OOP) costs in Medicare can lead to financial precarity for beneficiaries.
- Beneficiaries with modest incomes often lack Medicaid eligibility and struggle with unexpected healthcare expenses.
- Existing financial protections for Medicare beneficiaries are insufficient, and the at-risk population is not well-defined.
Purpose of the Study:
- To identify Medicare beneficiaries at risk of financial precarity due to the Medicare Part A hospital deductible.
- To characterize the population facing potential financial hardship from healthcare costs.
Main Methods:
- Cross-sectional study using the 2018 Health and Retirement Study data.
- Analysis of community-dwelling Medicare beneficiaries with incomes between 100% and 400% of the federal poverty level.
- Examination of financial precarity based on checking/savings balances, liquid assets with a living expense reserve, and supplemental insurance coverage.
Main Results:
- 45.0% of beneficiaries lacked sufficient checking/savings to cover the $1600 Medicare Part A deductible.
- Financial precarity was higher among Black and Hispanic beneficiaries, those with lower education levels, and individuals with multiple chronic conditions.
- Even after accounting for liquid assets and supplemental insurance, a significant portion remained financially precarious.
Conclusions:
- A substantial number of Medicare beneficiaries with modest incomes are vulnerable to financial hardship from a single hospital stay.
- The study highlights the need for improved financial protections within Medicare to mitigate the impact of cost-sharing.
- Targeted interventions may be necessary for vulnerable subgroups identified in the research.
Background:
High out-of-pocket costs in Medicare may leave many beneficiaries in financial precarity. Beneficiaries with modest incomes are often ineligible for Medicaid (which covers most out-of-pocket Medicare costs) and may have insufficient resources to pay an unexpected health care bill. This has prompted calls to improve financial protections, but the target population remains uncharacterized.
Objective:
To identify beneficiaries who would face financial precarity if exposed to the Medicare Part A hospital deductible ($1600).
Design:
Cross-sectional study of the 2018 wave of the Health and Retirement Study.
Setting:
United States.
Participants:
Community-dwelling Medicare beneficiaries with incomes greater than 100% to 400% or less of the federal poverty level.
Measurements:
Nationally representative estimates of financial precarity, defined as having insufficient funds to pay the deductible, examined across 4 scenarios that considered checking and savings account balances, total liquid assets (with a reserve for future living costs), and supplemental insurance.
Results:
Among 4881 beneficiaries (population weighted n = 26 619 823), 45.0% had insufficient funds in checking and savings accounts to pay the Medicare hospital deductible. Financial precarity was more prevalent among Black and Hispanic versus White beneficiaries (73.5% and 76.2% vs. 36.2%), those with less versus more than high school education (70.0% vs. 37.1%), and those with 3 or more versus 2 or fewer chronic conditions (49.2% vs. 39.1%). In defining financial precarity to include beneficiaries with insufficient liquid assets to pay the deductible while maintaining a $5000 reserve for future living expenses, 50.7% were financially precarious. Building off this definition to assume supplemental insurance covered the deductible, 39.0% remained financially precarious.
Limitation:
Cost-sharing exposure is limited to hospitalization.
Conclusion:
Many Medicare beneficiaries with modest incomes are at risk for financial hardship from costs of a single hospital stay.
Primary Funding Source:
National Institute on Aging.
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