The Financial Burden of Health Care Spending: Larger for Medicare Households than for Non-Medicare Households

The U.S. has spent more on health care services than any other country for decades. This big difference in health care costs is not due to America receiving more health services than the citizens of other countries, but rather the prices that are charged for health care products and services, which are much higher on average than in other countries. This greater cost of health care in the U.S. has major implications for other persons who use much more health care than younger age groups. Older Americans pay over twice as much for health care out of pocket (over 14% of net income) as younger persons. As health care costs rise and medicare continues to cover only about 57% of what beneficiaries are charged for care, this out of pocket spending among older consumers of health care is likely to increase as well. 

Medicare offers health and financial protection to nearly 60 million adults ages 65 and over and younger people with disabilities. However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package, combined with relatively low incomes among the Medicare population, can result in beneficiaries devoting a substantial share of their total household spending to health care costs.

This analysis compares health-related expenses as a share of total household spending for Medicare and non-Medicare households, using the 2016 Consumer Expenditure Survey (CE). We estimate how much Medicare and non-Medicare households spent on health care, including premiums, compared to other household spending (e.g., housing, transportation, and food). We also show how health expenses as a share of Medicare household spending varies by age (based on the oldest household member) and poverty level, and changes over time. Because the CE is a survey of the non-institutional population, it excludes out-of-pocket spending on nursing homes and other long-term care facilities, which is a significant share of average out-of-pocket costs for people with Medicare; thus this analysis understates the spending burden for households that incur long-term care facility costs, which may fall disproportionately on Medicare households.

– KFF

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The United States spends twice as much on healthcare as 10 other high-income nations, driven by the high price of everything from prescription drugs to doctors’ salaries, a new study in the Journal of the American Medical Association finds.

Recent attempts to reform American healthcare have assigned blame for the high cost of care to nearly every sector – from drug companies to hospitals to health insurers.

However, a co-author of the new study said those arguments ignore the “800-pound gorilla”: sky-high prices everywhere.

“Most countries get to lower prices one of two ways: they either have a very strong price setter, usually a government agency, or more efficient markets,” said Dr Ashish Jha, co-author of the study by researchers at Harvard’s TH Chan School of Public Health. “The US has figured out how to do the worst of both.”

In the study, America was compared to 10 other countries: the United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, Denmark, the Netherlands and Switzerland.

Researchers used 98 indicators to compare countries across seven areas: general spending, population health, structural capacity, utilization, pharmaceuticals, access and quality and equity. The majority of the data came from international organizations, such as the Organization for Economic Cooperation and Development. What researchers found was not a single sector with high prices, but that every sector had extraordinary price tags.

For example, the average salary for a general practice physician in the other countries was between $86,607 and $154,126. In the US, the average salary was $218,173.

– The Guardian

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