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INSIGHT on the Issues
AARP Public Policy Institute
Health Care Reform: What’s at Stake for 50- to 64-YearOlds? More than one in four adults ages 50 to 64 spends at least 10 percent of their disposable income on health care. These include insured adults for whom premiums are a stretch as well as insured and uninsured adults for whom the overall cost of care is a burden.
What’s at stake Health care reform offers the opportunity to help reduce the financial and health risks currently faced by millions of adults ages 50 to 64.
10 percent of their disposable family income on health. Their average spending on premiums was three times that of their peers with employer coverage.3
In 2007, nearly 55 million adults were in their 50s and early 60s. The aging of the baby boomers will push the size of this age group to nearly 63 million, more than 19 percent of the population, by 2015.1 The rising cost of health care has made access to adequate, affordable health care coverage problematic for many in this age group. Without sufficient coverage and treatment, they face the prospect of declining health and insufficient care. Those consequences will follow many of them into Medicare.
Medicaid and Medicare provide important coverage to 13 percent of this age group,4 but 38 percent of those with public insurance still spent at least 10 percent of their income mainly for health care.5
7.1 million adults ages 50–64 were uninsured in 2007—1.9 million more than in 2000.
To address the needs of older adults, health care reforms must focus on challenges that have only been heightened by the current economic crisis.
Risk of high health spending varies by insurance status
One in four older adults spent 10 percent or more of disposable family income on health care in 2005, compared with one in six adults ages 18 to 49.2
Two-thirds of those buying coverage in the individual market spent at least
This paper explores health care cost and coverage issues for the 50-to-64 age group and policy implications for health care reform.
In 2005, nearly 30 percent of the 50- to 64-year-old population spent at least 10 percent of their after-tax disposable income on health care services and/or premiums, a high health cost burden. In comparison, 16 percent of the 18- to 49year-old population had burdens at this level.6
Table 1. Out-of-Pocket Burdens Among Adults Ages 50 to 64 Vary by Type of Insurance Coverage, 2005
The likelihood of high out-of-pocket health spending is greatest among insured older adults without access to employer coverage (table 1).
One in four older adults with employer health coverage had a high out-of-pocket spending burden.
Two-thirds of those buying coverage in the individual market spent at least 10 percent of their disposable family income on health.
Average out-of-pocket spending on premiums in the individual market was three times that of those in employer coverage.
High Total Family Burden
All Private Employer Other Private Public Uninsured
28%
$3,829
$2,039
25%
$4,103
$2,280
67%
$8,457
$6,040
38% 23%
$1,913 $1,733
$372 $206
Total Spending on Premiums
Source: J. Banthin, and D. Bernard, Analysis of Medical Expenditure Panel Surveys, unpublished data, AHRQ. “High burden” is defined as spending 10 percent or more of disposable family income on health premiums and health care services.
Average total out-of-pocket spending in the individual market was more than twice that of those with employer coverage.
The uninsured must pay the full cost of health services that they use out of pocket. For them:
Despite the higher cost of coverage in the individual market, benefits tend to be somewhat less generous than those in the employer market. Those with public coverage, such as Medicaid and Medicare, are also at higher risk of having high out-of-pocket health spending (table 1). In 2005,
Type of Insurance Coverage
Total Health Spending for Premiums and Services
Total health spending is less than half the average for the age group as a whole.
Lower health spending indicates that, on average, the uninsured use less health care than their peers.
Studies have shown that uninsured older adults with health problems are likely to suffer worse health outcomes. The current low rates of spending for this group suggest that although some uninsured older adults are healthy and do not need care, others may be deferring care for health conditions, which may lead to serious health problems and higher spending in the future.
Nearly two in five older adults on public coverage (e.g., Medicare, Medicaid, Veterans Administration) spent at least 10 percent of their disposable income on health care— the vast majority of their out-ofpocket spending was for health services.
Given that disability is the major eligibility criteria for public coverage in this age group, this level of spending on services means that those in the poorest health are particularly vulnerable to high health spending, even with public coverage.
2
Risk of high health spending increases as income decreases Even before the current economic downturn, health care costs were squeezing the family budgets of a growing number of poor and low- and middle-income older adults. Figure 1. Risk of Spending 10 Percent or More of Disposable Income on Health Care Is Higher for Poor and Low- and Middle-Income Adults Ages 50 to 64, 2005
Thirty-eight percent of older adults who have low or middle family incomes (incomes of 100 to 199 percent of FPL and 200 to 399 percent of FPL, respectively) also have high health spending burdens.
Between 2001 and 2005, high health spending increased by 25 percent among middle-income 50- to 64year-olds.7
While high income older adults had a lower risk of high health spending in 2005, the prevalence of high health costs in this income group jumped 74 percent from 2001.8
52%
Risk of high health spending varies by health 38%
38%
Surveys show that chronic health conditions are associated with higher total health costs, and an increased number of chronic health conditions increases the total health costs.9
16%
Po o r/Neg ative Inco me
Near Po o r/ Lo w Inco me
M id d le Inco me
Seven in ten 50- to 64-year-olds report having been diagnosed with one or more chronic health conditions, and nearly half have two or more chronic conditions.
Average total health spending for older adults with two chronic conditions is one-and-a-half times that of older adults with only one chronic condition, and more than three-and-a-half times the average total health spending for an adult with no chronic health conditions.
Twenty percent of 50- to 64-yearolds reported limitations in one or more activities of daily living, a factor that is associated with significantly higher health costs.
Hig h Inco me
Source: J. Banthin, and D. Bernard, Analysis of 2005 Medical Expenditure Panel Survey (MEPS), unpublished data, AHRQ. Poor is
