Medicare households spend more on healthcare, report finds

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Those in Medicare households spend more on healthcare than those in other households – about twice as much, in fact, according to a new KFF analysis.

Medicare households spent more both as an annual dollar amount and as a share of total household spending. They spent an average of $7,000 on healthcare, accounting for 13.6% of their total household spending ($51,800), while non-Medicare households spent $4,900 on their healthcare, accounting for 6.5% of their total household spending ($74,100).

The larger burden of healthcare spending is a function of both lower average total household spending for Medicare households than non-Medicare households and higher healthcare use, which results in higher health care spending by the former, the report said.

WHAT'S THE IMPACT?

Consistent with the higher average healthcare spending burden, a larger share of Medicare households spent 20% or more of their total household spending on health-related expenses – nearly 3 in 10 (29%) Medicare households versus 7% of non-Medicare households. Nearly three out of four Medicare households (74%) spent 10% percent or more of their total household spending on health expenses, compared to a quarter (25%) of non-Medicare households.

In 2022, Medicare households spent an average of $7,000 on healthcare – $2,400, or 53% higher than the amount spent in 2013. With total household spending by Medicare households growing at nearly the same rate as the growth in healthcare spending over these years, healthcare as a share of total household spending was nearly the same in 2022 (13.6%) as in 2013 (13.5%).

Similarly, non-Medicare households also spent more on healthcare in 2022 ($4,900) than in 2013 ($2,800), a 71% ($2,100) increase. Healthcare as a share of total household spending for non-Medicare households was somewhat higher in 2022 (6.5%) than in 2013 (5.4%).

Between 2019 and 2020, spending by Medicare households on food and transportation fell, likely reflecting stay-at-home policies established at the outset of the COVID-19 pandemic, and total household spending declined somewhat, according to the report. By contrast, between 2021 and 2022, total household spending increased substantially, reflecting increases in all categories of household spending, as price inflation hit its highest level since 1981 in 2022. This was true for both Medicare and non-Medicare households.

THE LARGER TREND

Policies aimed at improving financial protections for Medicare beneficiaries have been proposed in recent years. The Inflation Reduction Act of 2022 includes several provisions that lower prescription drug costs for people with Medicare, including a cap on Medicare beneficiaries' out-of-pocket spending under the Medicare Part D benefit; a limit on insulin cost sharing to $35 a month in Medicare Part B and Part D; and expanded eligibility for full Part D Low-Income Subsidies. 

Policymakers have also considered other proposals that would improve the affordability of healthcare for Medicare beneficiaries, such as expanding income eligibility thresholds for the Medicare Savings Programs to enable more people to qualify for these financial supports, and adding an out-of-pocket cap on cost sharing for benefits covered under traditional Medicare. Adopting such changes, however, would require additional federal spending.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.