Despite Medicare, High Out-of-Pocket Health Costs Cause Financial Pain for Millions of American Seniors
It’s easy for younger Americans – in other words, anyone under the age of 65 – to assume that seniors have it made when it comes to health care costs. The reason: Medicare. Anyone not covered by Medicare might figure that all a senior has to do is flash their Medicare card and all expenses are covered.
But in fact, as good as the program is, it’s not the “golden ticket” that the uninformed think it is. This recent article from NextAvenue, written by reporter Richard Eisenberg, explains just how much of a burden American seniors face from the long-list of out-of-pocket costs that Medicare doesn’t cover – a burden that’s worse in the U.S. than in just about any other comparable country.
New Report Dispels Medicare Myths
Some recent reports reveal troubling truths about the reality of healthcare costs for older Americans. These burdensome costs are something most people under 65 probably take in stride as “no big deal” because of the perceived expansiveness of Medicare.
The Commonwealth Fund, a nonprofit health care think tank, recently published the results of a survey of 18,477 adults. The research reveals that Americans 65 and older are more likely to skip or postpone health care because of cost than people of similar age in 10 other high-income countries – including France, Germany, and the United Kingdom, among others. The same survey also revealed that one in five American seniors paid over $2,000 in out-of-pocket medical expenses in the past year, a far higher figure than nine out of those ten high-income countries for comparison. Only the Swiss fared worse.
Out-of-Pocket Expenses Undermine Financial Security
Gretchen Jacobson of The Commonwealth Fund told NextAvenue that the average Medicare recipient makes about $30,000 a year. “So, when you talk about two thousand dollars or more out of pocket, that’s a significant amount of money,” she says. “Americans sixty-five and older often simply can’t afford the care and they don’t get the care that they can’t afford.”
This expense can have far-reaching impacts on Americans’ retirement security. Financial services firm Fidelity estimates that the average couple 65 years or over will probably need around $300,000 saved to pay for health care in their retirement years, a figure that takes most by surprise. Hefty out-of-pocket costs make that burden even heavier and harder to bear.
Three Causes for Stress for Medicare Recipients
Since Americans generally assume that Medicare covers most of the cost for retiree health care, what could possibly be pushing the numbers of out-of-pocket expenses so high? According to Eisenberg’s article, it’s three things: the gaps in Medicare’s coverage, the price of cost-sharing (the 20 percent of bills beneficiaries must pay for common costs like preventative care and mental health), and the cost of annual deductibles and premiums.
Medicare’s biggest coverage gaps are well-documented. Besides the largest of all – long-term care expenses – the gaps include dental, vision, and hearing costs which Medicare doesn’t generally cover (although Medicare Advantage plans generally do). These services can be especially costly, especially with dentures, eyeglasses, and hearing aids required as adults age.
Eisenberg notes that the other countries surveyed by The Commonwealth Fund do cover these costs, which is why people over 65 in those countries do not spend the large amounts that Americans do on health care.
What Medicare Doesn’t Cover
Let’s explore those gaps in coverage: long-term care, dental, vision, and hearing.
Long-Term Care: According to a report by the Center for Retirement Research at Boston College, roughly a quarter of retirees have the means to cover acute long-term care for at least five years. A further quarter can’t afford even the most minimal long-term care expense. That leaves half who are somewhere in between. The survey also uncovered a racial disparity: among Black and Hispanic retirees, only about 5 percent have the means to cover acute long-term care costs.
Vision and Hearing Care: As far as vision and hearing, the need is real. A whopping 44 percent of Medicare beneficiaries have hearing needs and 35 percent have vision problems requiring care. Unless they are on an Advantage plan, they will generally need to pay for those costs themselves.
Dental Care: Dental coverage is an acute need, yet more than one sixth of Americans skipped a dental visit last year because of cost, according to The Commonwealth Fund. Only 53 percent of Americans between age 65 and 80 have dental coverage, and most of these are through employer plans for themselves or through their spouse.
The High Costs of Delaying Health Care
These gaps in Medicare coverage have disturbing implications, NextAvenue warns. Because the costs of care can lead many seniors to delay or skip care altogether, these delays lead to missed diagnoses and even higher costs later on. Gretchen Jacobson explains, “It’s stunning how many people end up skipping needed health care because they can’t afford it.” She adds, “Delayed care can lead to delayed diagnoses, so that can result in poor health outcomes and also higher health care spending down the road.”
Research backs up her claims. Forgoing or postponing medical and dental care has been repeatedly shown to result in even worse physical problems. Gum disease in seniors, for example, is linked to higher incidents of heart attacks and strokes, yet too often goes untreated.
Living with health problems—and the stress of the financial burden of care—also has a key impact on mental health for the sufferer. Some adults over 65 live with ongoing pain and discomfort, disruptive to their lives, just to avoid paying the high costs that they cannot afford. This can lead to potentially devastating isolation and depression.
Experts Say New Solutions Needed
The high cost of senior medical care is drawing national attention. In his NextAvenue article, Eisenberg writes, “President Joe Biden’s Build Back Better plan, currently being debated in Congress, would add dental, vision and hearing coverage to Medicare. That would be the largest expansion of Medicare benefits in 15 years and cost somewhere around $358 billion over 10 years.”
This solution is not without its detractors. Some argue that the expense for the government would make this change untenable. To make matters more complicated, according to its trustees, the Medicare Trust Fund is estimated to become insolvent early in the next decade. This balance between what the beneficiaries need and what the government can afford has always been an issue in Medicare since its inception.
Still, that doesn’t mean you have to approach your retirement with fear. An understanding of the true costs of health care in your retirement should inspire you to act now, putting your plans in place to avoid as many surprises as possible. That way, no matter the future of Medicare, your retirement years can be a time of dream-chasing and security.
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(originally reported at www.nextavenue.org)