Out-Of-Pocket Spending Increases For Medicare Beneficiaries

A growing share of Medicare beneficiaries' income was spent on health care, with median out-of-pocket health spending up from 11.9% of income in 1997 to 15.5% in 2003, according to a new study published in the November/December 2007 issue of the journal Health Affairs.

The study found that about four in 10 beneficiaries spent at least one-fifth of their income on health care in 2003. The top 10% of beneficiaries spent more than half of their income on health care. The study found that growth in out-of-pocket health spending outpaced growth in income over time. Between 1997 and 2003, median out-of-pocket health spending increased by $1,116 — a 50% increase, while median individual income rose by just 15%. Premiums for Medicare and supplemental insurance were the largest component of the increase, followed by payments for medical care providers and services.

Spending on prescription drugs accounted for a relatively small share of total out-of-pocket health spending in 2003 (13.7%), but accounted for 18.1% of the out-of-pocket spending increase between 1997 and 2003. The authors note that it is too early to determine the effect of the Medicare Part D drug benefit on the overall financial burden of health care spending by Medicare beneficiaries. The article can be found at www.kff.org/medicare/med110107oth.cfm.