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Impact of Medicare Reform on Beneficiaries

Wed, 01/03/2001 - 12:00am — Karen Stevenson
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The Urban Institute released a report this week in which they analyze the impact of proposed Medicare reforms on Medicare beneficiaries. This paper is the first of a series of papers which will examine the impact of various proposals on beneficiary out-of-pocket spending, the money that beneficiaries pay in premiums, deductibles, and co-payments for the care that they receive. The study's authors point out that most of the debate on Medicare reform has centered around the cost of the program to taxpayers, but little has been said about the impact of proposed changes on the out-of-pocket costs of beneficiaries.

In this first report, in order to establish a baseline for later analysis, they estimated the out-of-pocket costs for beneficiaries 25 years from now if the program remained unchanged. They concluded that out-of-pocket spending for the average beneficiary would rise from $3,142 in 2000 to $5,248 by 2025. At this level, out-of-pocket medical costs would rise from about 22% of total income in 2000 to nearly 30% of total income by 2025. The picture is even worse for those in poor health without other insurance, who would see out of pocket costs, in dollars and as a percentage of income, rise from $4,478 (44%) in 2000 to $7,263 (63%) by 2025. Low-income single women in poor health over age 85 would experience the most severe impact, as their costs rise from $5,969 (52%) in 2000 to $9,378 (72%) by 2025.

The Urban Institute released a report this week in which they analyze the impact of proposed Medicare reforms on Medicare beneficiaries. This paper is the first of a series of papers which will examine the impact of various proposals on beneficiary out-of-pocket spending, the money that beneficiaries pay in premiums, deductibles, and co-payments for the care that they receive. The study's authors point out that most of the debate on Medicare reform has centered around the cost of the program to taxpayers, but little has been said about the impact of proposed changes on the out-of-pocket costs of beneficiaries.

In this first report, in order to establish a baseline for later analysis, they estimated the out-of-pocket costs for beneficiaries 25 years from now if the program remained unchanged. They concluded that out-of-pocket spending for the average beneficiary would rise from $3,142 in 2000 to $5,248 by 2025. At this level, out-of-pocket medical costs would rise from about 22% of total income in 2000 to nearly 30% of total income by 2025. The picture is even worse for those in poor health without other insurance, who would see out of pocket costs, in dollars and as a percentage of income, rise from $4,478 (44%) in 2000 to $7,263 (63%) by 2025. Low-income single women in poor health over age 85 would experience the most severe impact, as their costs rise from $5,969 (52%) in 2000 to $9,378 (72%) by 2025.