Rutgers: Uninsured Drug Costs Hurt Poor
Rebecca Goldsmith
Star-Ledger Staff
2 March 2000
The Star-Ledger Newark, NJ
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(c) 2000. The Star-Ledger. All rights reserved.
A new Rutgers University study shows that the nation's poorest and sickest elderly residents are also those most burdened by health care costs not covered by Medicare or other federal insurance.
Rutgers researchers, using figures from a federal survey of Medicare recipients, found the elderly are using a higher percentage of their income to pay for prescription drugs than previous studies showed, and that the percentage of personal spending on medicines rises as income levels drop.
Prescription drug spending makes up the largest chunk of the average older American's health care budget, accounting for 34 percent, the study said. The share is even higher - 40 percent - for those in the lowest income categories.
The issue of so-called "out-of-pocket" health expenses has emerged as a major part of the national debate over adding a prescription drug benefit to Medicare, the health insurance program for the elderly that currently pays nothing for prescriptions.
Medicare covered only 65 percent of payments to health care providers, the study shows. Figures were drawn from an extensive 1995 Medicare survey and include health insurance premiums, medical co- payments and prescriptions. It does not include people living in nursing homes.
"Medicare as a program provides a great service to older Americans, but it has a lot of holes in it," said David Gross of the American Association of Retired Persons' public policy institute.
"People who do not have help to pay for those holes can be paying a lot more."
Rutgers' findings bolster the political argument for prescription coverage under Medicare, the federal health insurance program for Americans age 65 and older. The program does not pay for medications unless they are administered in a hospital.
"This supports the whole case for prescription drugs because it makes up a bigger share than a lot of previous research has shown," said Stephen Crystal, the study's lead author and chairman of the Division on Aging of the university's Institute for Health, Health Care Policy and Aging Research.
"Medicare's structure is really out of date. In 1965 (when Medicare started), people were worried about hospital costs. Prescription drugs were really an afterthought," he said.
Joel Cantor, director of the Center for State Health Policy, said that while New Jersey has gone further than any other state in offering assistance to the elderly poor for their drug bills, "it clearly does not deal with the whole problem. Even with the middle-income people, drugs can be several thousands of dollars a year. That's enormously burdensome."
While the average elderly American who does not live in a nursing home spends 19 percent of their total income on out-of-pocket health costs, the percentage rises for the most vulnerable groups:
The poorest fifth of people 65 and older - those with family income of up to $6,720 per capita -spent 32 percent of their income on medical bills despite Medicaid coverage for some.
Those whose self-reported health was "poor" spent 29 percent, compared to those in "excellent" health, who spent 15 percent.
Those ages 85 and older spent 22 percent out of pocket, compared to those between 65 and 74, who paid 17 percent.
Those who did not complete high school spent 21 percent; college graduates spent 12 percent.
People who rely on self-purchased supplemental insurance spent 25 percent of their total income, while those relying solely on fee-for-service Medicare paid 23 percent. Those with employersponsored coverage paid 16 percent. Those enrolled in HMOs paid 15 percent.
Now that managed care has driven down the price and duration of hospital care, the burden of prescription costs has been transferred to beneficiaries. Add to that the burgeoning array of sophisticated medications on the market and the costs grow further.
"Medicare benefits need to be modernized to assure that all older and disabled beneficiaries can have access to life-saving and quality-of-life-enhancing medicines," said Karen Davis, president of the Commonwealth Fund, a private foundation promoting research on health and social issues.
"No one's father should have a stroke because he couldn't afford hypertensive medication," she said, "and no one's mother should break her hip because she couldn't afford a medicine to prevent osteoporosis."