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The Kaiser Family Foundation (KFF) just released a report entitled “Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future” (January 2018).  As noted in the report, “[w]ith half of all Medicare beneficiaries living on annual per capita income of less than $26,200, out-of-pocket health care costs can pose a challenge, particularly for beneficiaries with modest incomes and those with significant medical needs.”     

Using a broad definition of health care expenses beyond beneficiary out-of-pocket expenses projected in the annual Medicare Trustees’ report, KFF notes that “rising health care costs post significant affordability challenges for many people on Medicare today, particularly those with relatively low incomes who derive most of their income from Social Security, and […] this burden can be expected to grow in the future.”

The Report’s key findings, as stated in the Executive Summary, are:

  • In 2013, Medicare beneficiaries’ average out-of-pocket health care spending was 41 percent of average per capita Social Security income; the share increased with age and was higher for women than men, especially among people ages 85 and over.
  • Medicare beneficiaries’ average out-of-pocket health care spending is projected to rise as a share of average per capita Social Security income, from 41 percent in 2013 to 50 percent in 2030.
  • Half of beneficiaries in traditional Medicare spent at least 14 percent of their per capita total income on out-of-pocket health care costs in 2013. The spending burden was higher for people ages 85 and over, in poor health, and with modest incomes.

More than one-third (36 percent) of beneficiaries in traditional Medicare, and half of those with incomes below $20,000, spent at least 20 percent of their per capita total income on out-of-pocket health care costs in 2013. By 2030, more than 4 in 10 (42 percent) traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on health-related out-of-pocket costs.

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