Out-of-pocket burden of health care spending and the adequacy of the Medicare Part D low-income subsidy

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Department of Medicine, Division of Geriatric Medicine; Meyers Primary Care Institute

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Adult; Aged; Confidence Intervals; *Cost of Illness; Deductibles and Coinsurance; Drug Prescriptions; Female; Financing, Personal; Health Expenditures; Humans; Income; Male; Medicare Part D; Middle Aged; Odds Ratio; Poverty; Socioeconomic Factors; United States


Geriatrics | Health Services Research | Primary Care


BACKGROUND: Evaluating the adequacy of Medicare prescription drug program (Part D) and its low-income subsidy (LIS) requires a comprehensive understanding of drug spending in relation to household resources.

OBJECTIVE: : To estimate out-of-pocket health care costs in the year before Part D, in context of total household spending, health status, and LIS eligibility.

RESEARCH DESIGN: Nationally representative cross-sectional study.

SUBJECTS: Two thousand two hundred thirty-one Medicare families in the 2005/2006 Health and Retirement Study.

METHODS: We assessed health care costs as a share of household resources remaining after spending on essential housing, food, personal care, and transportation. Burdensome health care costs were defined as exceeding 40% of nonessential resources. We used logistic regressions to assess the probability of incurring burdensome health expenditures, controlling for LIS eligibility.

RESULTS: In the year before Part D, more than half of Medicare families [56.0%; 95% confidence interval (CI): 55.3-59.9] experienced burdensome health care costs. Families in poor health allocated a median of 68.1% [interquartile range (IQR): 35.1-82.9] of nonessential resources to health care (compared with 34.0% median; IQR 11.9-52.2 among families in excellent health, P < 0.011). Most (64%) out-of-pocket health care spending was allocated to health insurance premiums and medications. As many as 26% of Medicare families had burdensome health care costs but were not eligible for LIS assistance.

CONCLUSIONS: Before Part D, burdensome health care expenditures were common in Medicare families. Our estimates of Part D and LIS benefits indicate a limited scope of relief.

DOI of Published Version



Med Care. 2010 Jun;48(6):503-9. Link to article on publisher's site

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Medical care

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