Medicare is not enough—why so many Americans over 65 can’t afford health care
The Medicare system generally doesn’t pay for long-term care. ISTOCK
Steep out-of-pocket costs are causing them financial pain
Some people think high health care costs aren’t a problem for Americans 65 and older because Medicare pays all their medical expenses. But a new eye-opening report from the Commonwealth Fund, a nonprofit health care think tank, shows just how wrong that presumption is.
In reality, Americans 65 and older were more likely to postpone or forgo health care in the past year because of cost than people their age in 10 other high-income countries, according to the Commonwealth Fund’s survey.
What’s more, the survey of 18,477 adults found, 20% of Americans 65+ had out-of-pocket health costs exceeding $2,000 last year. That’s higher than in nine of the 10 countries (the outlier: Switzerland, at 34%). In France, Germany, the Netherlands, Norway, Sweden and the United Kingdom, just 4% to 5% did.
Unaffordable health care for people 65+
“Americans 65 and older often simply can’t afford the care and they don’t get the care that they can’t afford,” Gretchen Jacobson, the Commonwealth Fund’s vice president, Medicare, told me.
Jacobson noted that the average Medicare recipient makes about $30,000 a year. “So, when you talk about $2,000 or more out of pocket, that’s a significant amount of money,” she said. That $2,000 tab works out to about 7% of their income.
And these steep out-of-pocket health expenses can also harm Americans’ retirement security. According to the financial services firm Fidelity, the average 65-year-old couple may need about $300,000 saved for health care costs in retirement.
The Commonwealth Fund’s report comes on the heels of another one it published that I recently wrote about in “Older Americans Are Getting Slammed Financially During COVID-19 Times.” That one also found that Americans 65+ were faring worse than others their age in 10 wealthy nations.
So, what’s causing the financial stress for Medicare beneficiaries?
It’s a combination of three things, mostly: the types of care Medicare doesn’t cover; the 20% of bills beneficiaries must pay (known euphemistically as cost-sharing) for Medicare Part B expenses like doctor’s visits, mental health and preventive care and the cost of Medicare’s annual deductibles (what beneficiaries pay out-of-pocket before coverage kicks in) and premiums.
Unlike in many other countries the Commonwealth Fund studied, America’s Medicare system generally doesn’t pay for long-term care. Nor does it usually cover dental, vision or hearing costs which, a recent Kaiser Family Foundation report said, “can run into the hundreds and even thousands of dollars for expensive dental treatment, hearing aids, or corrective eyewear.” (Private insurers’ Medicare Advantage plans, the alternative to Original Medicare, often do cover dental, vision and hearing expenses, though you usually must see health care providers in their networks.)
“It seems that other countries are providing more comprehensive care for seniors in their health care,” Jacobson said.
What Medicare Doesn't Cover
Only about a quarter of retirees can cover severe long-term care needs for at least five years and roughly another quarter can't afford even minimal long-term care needs, a recent report from the Center for Retirement Research at Boston College said. Just 5% of Black and Hispanic retirees have the ability to cover severe long-term care costs, this study also noted.
The Medicare coverage gaps are meaningful: 44% of Medicare beneficiaries have difficulty hearing and 35% have difficulty seeing, according to the Kaiser Family Foundation.
Just 53% of Americans aged 65 to 80 have dental coverage (often through employers, spouses' employers or Medicare Advantage plans), according to the University of Michigan's Institute for Healthcare Policy & Innovation.
And more than one of six older Americans skipped a dental visit last year because of cost, The Commonwealth Fund found. By contrast, just 1% to 2% of older adults in Germany and The Netherlands did.
"In the countries that provide more generous dental care, not too surprisingly, only a small percentage of people skip needed dental care," Jacobson said.
Dr. Domenica Sweier, a University of Michigan School of Dentistry professor who helped develop the National Poll on Health Aging's dental care study, has said: "Health care providers and policymakers should seek solutions to better identify and address how cost and other factors act as barriers to dental care among older adults."