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

Abstract

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 n = 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.