Health Care Costs and the Elderly
Many elderly Americans face the risk that a long debilitating illness will strip them of their financial self-sufficiency and force them to live out their last years on welfare or dependent on their children. Of all groups in society, the elderly population is at the highest risk of incurring high health care expenses. One of every five elderly is hospitalized each year, and of those hospitalized, 22 percent will reenter the hospital within sixty days. On any given day 5 percent of the elderly are institutionalized in nursing homes; one of every four elderly will
enter a nursing home during his or her lifetime. These levels of health care utilization, coupled with the high cost of medical care, put the elderly population at potential risk of financial disaster. To help minimize this risk, Medicare was enacted in the mid-1960s.
Keywords: Health Care Expenditures, Medicare, Medicaid, Social Security.
Health Care Expenditures
To better understand the out-of-pocket expenses of the elderly, it is useful to review what services Medicare does and does not cover. Medicare coverage is provided under two separate parts of Title 18 of the Social Security Act. Services covered under Part A consist primarily of
payment for hospital inpatient services, skilled nursing home services, and home care services. Part B coverage includes payment for services provided by physicians and other suppliers of medical services. Out-of pocket expenses fall into two categories limitations on Medicare payments for covered services such as deductibles and coinsurance, and services that Medicare does not cover.
At first glance, it would appear that the Medicare benefit of 100 days of post hospital skilled nursing care could provide substantial protection. Certainly, most elderly are not aware of the Medicare limitations. A recent survey conducted for the American Association of Retired Persons found that 79 percent of the elderly...