Study Sees Medicare Costs Rising

By: Leigh Strope
The Washington Post, January 2, 2001

WASHINGTON –– Medicare recipients will pay substantially more for health care in future years if no changes are made to the system, and those who are poorer, sicker and older will disproportionally absorb the rising costs, according to a study released Tuesday.

The average annual out-of-pocket cost for services not covered by Medicare is $3,142. That is expected to increase to $5,248 by 2025, according to the report by the Urban Institute, a Washington-based research group.

Challenges facing Medicare include health care costs that are increasing faster than income, a growing elderly population and inadequate funding, the report said. The Medicare population is expected to increase from about 40 million to 70 million in 2025.

The study said the rising costs of the program should not be shifted to beneficiaries.

Elderly Americans now pay about one-fifth of their income on out-of-pocket health care costs, such as premiums and prescription drugs, the study said. By 2025, elderly Americans on average are expected to pay nearly one-third of their average incomes.

"These projections sound a clear warning about the ability of Medicare to keep its promise of protecting elderly Americans from impoverishment," said Karen Davis, president of The Commonwealth Fund, a private foundation that funded the study.

Low-income elderly women in poor health now spend on average nearly 52 percent of their incomes on out-of-pocket health care costs, the study estimated. That will increase to nearly 72 percent by 2025, without changes to the program.

Poor, sick Americans without insurance will spend about 63 percent of their incomes on health care in 2025, as opposed to 44 percent now, the study said. Older, disabled Medicare recipients will see their spending increase to 41 percent in 2025, up from 29 percent currently.

"Beneficiaries are often left out of the equation when proposals to change Medicare are considered," said Marilyn Moon, an author of the study. "These findings suggest that shifting even more expenditures to beneficiaries should not be the total solution."

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On the Net:

Urban Institute: http://www.urban.org/

© 2001 The Associated Press