Risk for Financial Precarity From Hospitalization: Implications for Targeting Financial Assistance in Medicare.

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  = 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.