Aging into Medicare and Financial Burdens and Affordability of Medical Care and Prescription Drugs

• In Event: Welfare Effects of Health Policies through Coverage, Financing and Access to Medical Care

Abstract

Spiraling U.S. health care costs have been accompanied by higher out-of-pocket (OOP) spending and a limited provider network for many individuals. As an important social program, by design, Medicare may protect those who would otherwise struggle to afford healthcare costs. Aging into Medicare at age 65 can improve beneficiaries' access to many types of medical care. However, beneficiaries may experience substantial changes to their cost sharing and or the availability of covered providers, largely due to their selection into Medicare Advantage (MA) over Traditional Medicare (TM) and their ability to enroll in a Medigap supplement plan. This study investigates whether aging into Medicare is associated with increased financial burden or difficulty affording needed medical services and prescription drugs.

 

We analyze individuals 60-70 years old in the 2018 - 2021 Medical Expenditure Panel Survey to identify changes out-of-pocket burdens and cost barriers associated with Medicare enrollment using a fuzzy regression discontinuity design. Having high medical burden is defined as spending above 20% of household income in a year on medical services, prescription drugs, and OOP insurance premiums. Affordability is captured by self-reported difficulty obtaining medical services and medications due to cost. We find that across income groups, aging into Medicare is associated with lower likelihood of having high medical burden, and lower chance of difficulty affording medical care. Specifically, Medicare was associated with a 20-percentage-point decrease in high medical burden for those enrolling into TM, and similarly, an 18-percentage-point lower high burden in those enrolling into MA. Aging into TM was related to lower likelihood of unaffordability for medical care by 6 percentage points.

 

We also find that TM is associated with lower likelihood of difficulty affording prescription medications among lower income beneficiaries (<300% FPL). However, individuals with income >400%, for both TM and MA, have slightly increased difficulty affording prescription medications after aging to Medicare overall. These findings suggest that Medicare is associated with lower financial burden overall, but may be associated with difficulty affording prescription drugs among higher income beneficiaries. That Part D coverage only reduces financial burdens for those with low or modest incomes may reflect the potential effectiveness of assistance to lower-income individuals through the Part D Low-Income Subsidy (LIS), which helps with premiums and cost-sharing.

Authors

• Wendy Yi Xu, The Ohio State University
  Non-Presenting Co-Author

• Adam Ira Biener, Lafayette College
  Presenting Author