Seniors’ health costs to gobble more income

WASHINGTON — A new analysis by the Kaiser Family Foundation has found that out-of-pocket heath care costs for Medicare beneficiaries are likely to take up half of their average Social Security income by 2030.

As many seniors know, Medicare does not cover an increasing amount of expenses related to health care, including supplemental insurance premiums, deductibles, long-term care and dental services.

Many Medicare recipients need to prepare for a big chunk of their income to be consumed by these out-ofpocket costs, according to Kaiser, a nonpartisan, nonprofit group that analyzes health care issues.

Kaiser wanted to build on a recent analysis by Medicare’s trustees. To quantify what people were spending on health care, the group examined out-of-pocket expenses relative to Social Security income and total income.

The report shows that Medicare coverage is already leaving a gap. And the chasm is especially pronounced for people who are in relatively poor health or have modest incomes.

The average Social Security income among all Medicare beneficiaries in 2013 was $13,375 (in 2016 dollars). The average total income was $35,317.

Among beneficiaries in traditional Medicare in 2013, more than half of those who are older than 85 or have incomes below $20,000 spent at least 20 percent of their total income on health care expenses. Two-thirds of all Medicare beneficiaries are in traditional Medicare, while a third are in Medicare Advantage plans such as HMOs and preferred-provider organization plans.

Also in 2013, among all Medicare beneficiaries, average out-of-pocket health-related expenses consumed 41 percent of the average Social Security income, according to a report made available exclusively to The Washington Post.

Kaiser based its projections on current law, assuming no changes in Medicare policies that would affect out-of-pocket costs, and no changes to Social Security and tax policy that would impact retirement income, between 2013 and 2030. The group said its analysis for 2030 was based on nominal health care costs growing at an average annual rate of 4.3 percent.

“It’s only a matter of time before lawmakers circle back to the federal deficit and options to reduce federal spending, and when they do, we think Medicare will be on the table,” said Tricia Neuman, senior vice president and director of Kaiser’s Program on Medicare Policy. “This report shows just what the burden already is today in the absence of any program cuts.”