Medicare, Medicaid, and the Elderly Poor

Diane Rowland, Sc.D., and Barbara Lyons, Ph.D.

INTRODUCTION care and erode financial security for low income elderly people. One out of every five elderly Americans This article profiles the economic and faces each day on a limited income with health status of the low-income elderly little flexibility for extra or unexpected population served by Medicare, assesses medical expenses. When medical care is the impact of Medicare, and examines the needed, these 6 million poor and near-poor role Medicaid plays as a supplement to elderly Americans depend on Medicare for Medicare. Particular emphasis is given to assistance with their medical bills. The uni- the burdens medical expenses impose on versal coverage of Medicare assures them low-income elderly people, the extent to entry to America's health care system and which coverage to supplement Medicare offers protection from financial catastrophe can assist in alleviating the impact of finan- when illness strikes. However, gaps in the cial burdens on access to care, and the im- scope of Medicare's benefits and financial plications of potential changes in the scope obligations for coverage can result in and structure of Medicare and Medicaid onerous financial burdens. for the elderly low-income population. Low-income elderly people are particularly vulnerable because they are more POVERTY AND ILLNESS IN THE likely to be experiencing health problems ELDERLY POPULATION that require medical services than those who are economically better off, but are Despite general improvements in the less able to afford needed care because of economic situation of the elderly popula- their lower incomes. Even routine care, tion over the last 3 decades, many elderly such as physician visits or prescription Americans continue to struggle to pay liv- drugs, can require older and poorer ben- ing expenses on low or modest incomes. eficiaries to make hard choices between Forty-one percent of the Nation's 31 million basic necessities and needed health care elderly people living in the community services. Medicaid serves as an important have incomes below twice the Federal pov- complement to Medicare by assisting low- erty level (FPL) and 1 in 5 are poor or near- income Medicare beneficiaries with their poor (U.S. Bureau of the Census, 1996). Medicare premiums and cost-sharing and In 1994, the FPL was $7,100 per year in by providing coverage for prescription income for a single elderly adult and $9,000 drugs and long-term care (LTC) services for an elderly couple. Twelve percent of the that are not available through Medicare. elderly population-3.7 million people- Without Medicaid's assistance, the costs of had incomes below the poverty level and basic medical care can impede access to another 7 percent-2.2 million people- were near-poor with incomes between 100 1 The authors are with the Henry J. Kaiser Family Foundation. and 125 percent of FPL (Figure 1). The opinions expressed are those of the authors and do not nec- essarily reflect those of the Henry J. Kaiser Family Foundation or the Health Care Financing Administration. ' The figures and tables appear at the end of the article.

HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18,Number2 61

Together, these 5.9 million poor and near- are married, in contrast to 72 percent of the poor people comprise Medicare's non-insti- non-poor elderly. This reflects the older tutionalized low-income elderly population. age composition of the poor elderly (14 per- Another 1.4 million elderly reside in nurs- cent are over 85 years of age compared ing homes and receive assistance from with 5 percent of the non-poor), and the toll Medicaid (Lyons, Rowland, and Hanson, time, illness, and loss of a spouse can im- 1996). pose on an individual's economic well-be- The likelihood of living on a low income ing. Yet it also means that the poor elderly is greatest for women, minorities, and the are less likely to have family or companions oldest Americans (Figure 2). Poverty rates living with them who can assist with increase with age, with 23 percent of medical or financial needs. people 75 years of age or over poor or near- Medicare coverage is especially impor- poor, in contrast to 16 percent of those 65- tant to low-income elderly people because 74 years of age. Nearly one-fourth of eld- they are in poorer health than higher in- erly women are poor or near poor, come elderly people and have few financial reflecting their lower wage levels during assets to draw on when faced with high working years, their increased risk of fi- medical costs. Poor health status, multiple nancial stress from widowhood, and lon- chronic conditions, and functional limita- gevity that exceeds savings. Elderly mi- tions are all more prevalent among the low- norities are particularly vulnerable to low income elderly population than among incomes. Thirty-seven percent of black eld- those with higher incomes. These condi- erly people and 36 percent of Hispanic eld- tions increase the need for and utilization erly people have incomes below 125 of medical services which in turn increases percent of FPL. the out-of-pocket expenses for cost-sharing Poverty is clearly linked to educational and uncovered medical expenses. level and highly correlated with marital The burden of illness is a serious prob- and living arrangements. Well-educated, lem for many poor and near-poor elderly married couples are financially better off people. Overall, one-fourth (24 percent) of than those who are less educated, single, the elderly population reports their health and living alone. Educational levels corre- status as fair or poor (Figure 4). Over one- spond to different job opportunities and ca- third (36 percent) of the poor and nearly reers, with the more highly educated likely one-third (32 percent) of the near-poor eld- to have better retirement benefits and erly report their health as fair or poor com- more personal savings from their working pared with only 17 percent of the non-poor years. Among today's elderly population, elderly with incomes above 200 percent of 42 percent have less than a high school FPL. Poor health status has been shown to education, but there are significant differ- be highly predictive of the need for medical ences by income. Seventy percent of the care (Manning, Newhouse, and Ware, 1981). poor elderly, compared with 23 percent of Chronic conditions requiring increased the non-poor elderly, are without a high contact with the medical care system and school diploma (Figure 3). ongoing health care costs are more preva- Marital status and living arrangement lent in the elderly population than in the also differ significantly by income, with 42 non-elderly population and can be particu- percent of the poor compared with 21 per- larly burdensome for low-income elderly cent of the non-poor living alone, and only people. All elderly people are at increased one-third (31 percent) of the elderly poor risk of chronic illness, but low-income

6 2 HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 people are more likely to have chronic impoverishment. The extent to which in- health problems than non-poor elderly surance is available to assist with medical people (Figure 5). Nearly two-thirds (65 bills becomes a crucial factor. percent) of poor elderly people suffer from arthritis that can impair mobility and result ROLE OF MEDICARE in the need for medication for treatment and pain relief. Similarly, the prevalence of With the enactment of Medicare in 1965, diabetes and hypertension, both illnesses basic health insurance protection for hospi- requiring substantial medication costs and tal care and physician services was ex- ongoing physician supervision, is highest tended to nearly all elderly Americans. The in the low-income cohorts of the elderly universal nature of Medicare coverage population. means that virtually no elderly person is Functional disabilities contributing to without insurance. Medicare facilitates ac- the need for LTC assistance further com- cess to physician services and guarantees pound the medical problems of elderly admission to a hospital when needed. It people (Rowland, 1989). Among non-insti- means that coverage for the elderly does tutionalized elderly Medicare beneficiaries; not vary by State of residence and does not 7.8 percent report needing help to perform limit the elderly's choice of providers in the one or more activities of daily living mainstream of American medical care. (ADLs), such as dressing, eating, and Over its 30 years of operation, Medicare toileting, and many more report difficulty has provided elderly Americans, and espe- in carrying out these activities due to cially poor elderly Americans, with the op- health problems. The rates are higher for portunity to benefit from the many ad- the poor and near-poor elderly, with 12.9 vances of American medical technology, percent of the poor and 10.5 percent of the most notably treatment for heart disease near-poor reporting such limitations (Fig- and cataract surgery, and to gain improved ure 6). Low-income elderly people are also access to the health care system (Madans more likely to have three or more ADLs and Kleinman, 1980; Davis and Rowland, and increased dependency because of mul- 1986). tiple limitations than those with higher in- Low-income elderly people have been comes. Elderly people with functional limi- particularly reliant on Medicare coverage tations are often financially strained by because they are in poorer health than non-medical needs and expenses as well as high-income elderly, and therefore, are by the need for additional services and spe- more likely to use health services. Al- cial transportation arrangements to obtain though Medicare provides basic health in- medical care. surance to promote access to care, it is not In sum, poor and near-poor elderly an all-inclusive comprehensive and free people are more likely to be experiencing medical plan for the elderly poor and near- health problems for which they require poor. Financial concerns can still impede medical services than elderly people who access to needed medical care, especially are economically better off, but they are for those who have the most health needs. less able to afford needed care because of Medicare beneficiaries in poorer health their lower incomes. For those who need are more likely to report barriers to care medical care and incur large out-of-pocket than beneficiaries with better health expenditures, medical expenses can lead to (Rosenbach, Adamache, and Khandker, 1995).

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 63 Some of the financial burdens for care reflects both their limited financial ability stem from the design and scope of the to pay substantial amounts and the likeli- Medicare benefit package. Modeled after hood that some of the low-income elderly private insurance coverage for the non-eld- are assisted with their medical expenses erly population, Medicare has substantial and premiums by Medicaid. Although the cost sharing requirements and financial ob- poor elderly spend a lower dollar amount ligations for beneficiaries. The hospital in- on out-of-pocket medical expenses than surance (Part A) component provides higher income elderly, that spending con- fairly extensive coverage of short-term hos- stitutes a much larger share of the overall pital care and some coverage of post acute income of the poor. Health expenditures skilled nursing facility and home health for acute care services and premiums by services. The supplementary medical in- the elderly represent one-third of the surance (Part B) component of Medicare family income of poor elderly people com- covers physician care and related ambula- pared with 16 percent for non-poor elderly tory services and home health visits. Medi- families (Figure 8). care requires beneficiaries to pay a pre- To provide assistance with cost sharing mium for coverage under Part B, a and additional protection, most elderly deductible for hospital care under Part A, people have private insurance and/or Med- and a deductible and 20 percent coinsur- icaid coverage to supplement their Medi- ance for most physician and ambulatory care coverage (Figure 9). In 1992, 81 per- care services under Part B (Table 1). cent of Medicare's elderly beneficiaries For many elderly people, Medicare thus had private supplemental insurance, often provides essential, but incomplete, protec- called medigap insurance, in addition to tion against medical expenses. In addition Medicare. An additional 9 percent of eld- to the required premiums and cost shar- erly beneficiaries received assistance from ing, Medicare's benefit package does not Medicaid because of their low incomes. cover the full range of health services However, 10 percent of Medicare beneficia- needed by many elderly people. Particu- ries had neither Medicaid nor private in- larly absent from the Medicare benefit surance to supplement Medicare. For package is coverage of outpatient prescrip- these Medicare-only beneficiaries, any ex- tion drugs, vision care, and dental serv- penses uncovered by Medicare are out-of- ices. In addition, Medicare does not cover pocket liabilities. chronic LTC needs, most notably nursing The pattern of insurance coverage varies home care for the disabled elderly (Feder significantly by income. Private insurance and Lambrew, 1996). to complement Medicare is most common Out-of-pocket spending on acute care among the elderly non-poor population and medical services and insurance premiums less extensive as a form of financing for for both Medicare and private supplemen- those with lower incomes (Figure 10). tal policies are significant expenses in the Among the elderly poor, over one-third (36 budgets of elderly Americans (Moon and percent) have Medicaid supplementary Mulvey, 1996). The average dollar amount coverage, 46 percent have private medigap of out-of-pocket spending increases with in- policies, and 18 percent rely solely on come, averaging $1495 in 1994 for non- Medicare. For the near-poor elderly, pri- poor elderly and $913 for poor elderly vate insurance coverage is more extensive, people (Figure 7). The lower level of with 64 percent privately insured. Among spending by low-income elderly people the near-poor elderly, 15 percent have

6 4 HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18, Number 2 Medicaid coverage and 21 percent rely important source of health care financing. solely on Medicare, reflecting the lower Medicaid will pay the Medicare Part B pre- penetration of Medicaid coverage for the mium for Medicare beneficiaries with in- near-poor population. comes below 120 percent of FPL plus the Affordability of private insurance poli- Medicare cost sharing for those with in- cies to supplement Medicare is a major comes below FPL. Elderly cash assistance barrier to coverage for many low-income recipients and others covered at State op- elderly beneficiaries. Higher income eld- tion can also receive additional benefits erly beneficiaries are much more likely to from Medicaid to supplement Medicare, have retiree benefits that provide health in- including prescription drugs and LTC surance coverage to supplement Medicare. coverage. Low-income people are less likely to have In recent years, Medicaid coverage of had the types of jobs during their working the elderly has been expanded consider- years that offer private health insurance af- ably to assist low-income Medicare benefi- ter retirement as a benefit. As a result, ciaries with the growing cost of Medicare higher income elderly are more likely to premiums and cost-sharing. Most notably, have employer-sponsored coverage, while as part of the Medicare Catastrophic Cov- low-income elderly are more reliant on erage Act of 1988, States were required by medigap coverage. July 1992 to provide Medicaid assistance An individually purchased medigap plan with the Part B premium and Medicare in 1992 averaged over $1,000 (Chulis, cost-sharing to all elderly individuals and Eppig, and Poisal, 1995). The high cost of couples with incomes below FPL and as- medigap coverage results in a greater fi- sets of less than $4,000 for individuals and nancial burden on low-income beneficia- $6,000 for couples. The individuals covered ries compared with more economically under this provision are referred to as advantaged elderly people. For a poor eld- Qualified Medicare Beneficiaries (QMBs). erly individual living on an annual income The act also required States to phase in by of less than about $7,000, spending $1,000 1995 assistance with Medicare's Part B on a medigap policy can substantially strain premium to individuals with incomes be- resources. In recent years, Medicaid has tween 100 and 120 percent of FPL. For this helped to fill this gap by providing assis- group, known as Specified Low-Income tance with Medicare's financial obligations Medicare Beneficiaries (SLMBs), assis- to low-income elderly Medicare beneficia- tance is limited to the premium payments. ries, but the large share of both poor and States are not required to provide either near-poor elderly people relying solely on group with wrap-around benefits to Medicare for coverage underscores the supplement Medicare. limits of Medicaid's reach. The over 4 million low-income elderly people on Medicaid qualify for assistance ROLE OF MEDICAID by various routes, as shown in Figure 11. Over one-half of the elderly with Medicaid Medicaid makes Medicare coverage af- coverage obtain eligibility as "categorically fordable for over 4 million low-income eld- needy" because they are recipients of cash erly Medicare beneficiaries by serving as assistance or eligible for assistance under their medigap policy. For those who qualify the Supplemental Security Income pro- for assistance from the means-tested Med- gram. Other individuals are covered at the icaid program, Medicaid coverage is an option of the State as "medically needy"

HEALTH CARE FINANCING REVIEW/Winter 1996/Volume is, Number 2 65

eligibles. These individuals, accounting for and Medicare premiums accounted for 7 20 percent of elderly Medicaid beneficia- percent of total Medicaid spending. ries, have incomes above welfare cash as- Medicaid thus plays a critical role in pro- sistance levels, but incur expenses for viding financial protection to low-income health services that reduce their available elderly people. However, the scope of income to below the income standard for Medicaid's protection remains limited in eligibility. terms of the share of the poor and near- Both the categorically needy and medi- poor population with coverage. Only one- cally needy groups receive Medicaid ben- third of the elderly poor and 15 percent of efits to complement Medicare's benefit the near-poor elderly have Medicaid cover- package as well as assistance with Medi- age despite the financial benefits of such care premiums and cost-sharing. The eld- coverage. Lack of awareness and under- erly in nursing homes with Medicaid cov- standing of the assistance Medicaid pro- erage are included in both the categorical vides, complex enrollment processes, lim- and medically needy groups. The QMB/ ited outreach activities by Federal and SLMB beneficiaries with their coverage State governments, and reluctance to apply mainly for Medicare financial obligations for help from a welfare-linked program all represent 13 percent of Medicaid's elderly contribute to low levels of participation in beneficiaries. The remainder of low-in- Medicaid by the poor and near-poor elderly come elderly beneficiaries qualify for cov- (Neumann et al., 1995). erage under coverage provisions that are at State option. IMPACT OF INSURANCE ON Despite Medicaid's important role in ACCESS providing protection for Medicare premium and cost sharing requirements, The level of insurance protection to alle- Medicaid spending on behalf of elderly viate financial barriers to care is clearly an beneficiaries goes primarily toward cover- important element in securing access to age of more costly LTC services. In 1993, care for the low-income elderly population. Medicaid spending totaled $125 billion, of Although Medicare coverage is universal, which $34 billion was spent on services for ability to pay for Medicare's cost-sharing the low-income elderly (Liska et al., 1995). requirements varies for elderly people at One-fourth of this spending went towards different income levels and with different acute care services and Medicare pay- levels of insurance supplementation. Lack ments, and the remainder was devoted to of supplementary coverage through pri- LTC spending on nursing homes and com- vate insurance or Medicaid to fill gaps in munity-based services (Figure 12). In Medicare coverage influences access to 1993, Medicaid paid $2.7 billion to the health services by elderly people. One-half Medicare program on behalf of low-income of the population that relies solely on Medi- Medicare beneficiaries for premium and care are poor or near-poor and likely to ex- cost-sharing obligations and spent an addi- perience financial burdens that jeopardize tional $6 billion to supplement Medicare's access to care. coverage of hospital and physician care Examining utilization of ambulatory care and to cover other medical services, such services by income status and insurance as prescription drugs not covered by Medi- status shows that Medicare coverage has care. These expenditures for acute care helped to reduce differentials in access to

66 HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2 care by income, but differentials still services (Weissman and Epstein, 1993). remain when variations in insurance are Having a usual source of care, or a particu- taken into account. Those with Medicare- lar place where care is obtained, is com- only coverage do not have comparable ac- monly viewed as an indicator of access to cess to those with private or Medicaid cov- medical care and an important component erage to supplement Medicare. Levels of of primary care. Low-income Medicare physician services are comparable across beneficiaries who rely solely on Medicare income groups and, currently, reveal are over twice as likely as those with addi- somewhat higher use rates for the low-in- tional coverage to be without a usual come population, reflective of their poorer source of care. Nearly one-fourth (22 per- health status (Figure 13). However, physi- cent) of Medicare-only beneficiaries report cian visits by insurance status, not control- no usual source of care compared with 8 ling for income, show that the Medicare- percent of those with private insurance and only population has fewer physician visits 9 percent of those with Medicaid (Figure 16). than the privately insured and notably Problems in obtaining care, such as de- fewer visits than those with joint Medicare lay in seeking care due to cost, provide di- and Medicaid coverage (Figure 14). The rect evidence of the impact of financial bar- higher rates for the Medicaid population riers to care. Problems in obtaining care reflect their higher rates of chronic illness may compromise health status and result and disability. in prolonged suffering and increased mor- These statistics, however, combine the bidity. If care is eventually obtained and the effects of income and insurance coverage problem has become more severe, it may on utilization. Using Medicare spending as be more difficult and costly to treat be- a proxy for health services utilization cause of the delay. Low-income elderly shows lower levels of access for beneficia- Medicare beneficiaries who have only ries without supplemental insurance. Low- Medicare are two times as likely to delay income beneficiaries who rely solely on seeking needed medical care as those with Medicare are less likely to use any Medi- additional private insurance or Medicaid. care covered services over the course of a One-fourth of low-income Medicare-only year. Among poor and near-poor Medicare beneficiaries indicate that they delayed beneficiaries, 30 percent of those with only seeking medical care in the past year be- Medicare coverage received no Medicare cause of worry about the cost (Figure 17). reimbursement for services, compared In contrast, only 13 percent of those with with 17 percent of those with private Medicaid or private insurance reported supplemental insurance and 11 percent such delays due to cost. Having additional with Medicaid (Figure 15). coverage substantially lowers the likeli- When access to care is assessed by in- hood of problems in gaining entry to the surance status and income level, it is appar- health care system. ent that to be low-income and covered only Similarly, lower levels of satisfaction with by Medicare is associated with access out-of-pocket costs reflects inadequate in- problems. Measures of access problems, surance coverage and can be indicative of including no usual source of care, difficul- access problems. Over one-fourth (27 per- ties in obtaining care, and lower satisfac- cent) of low-income elderly Medicare-only tion levels for particular aspects of care, beneficiaries report that they are unsatis- are indicative of problems in gaining entry fied or very unsatisfied with the out-of- to the health care system and in using pocket costs they paid for medical care

HEALTH CARE FINANCING REVIEW/ Winter 1996/volume IM, Number 2 67 (Figure 18). Those with private supplemen- The partnership between Medicare and tal coverage also reported similar levels of Medicaid has enabled millions of low-in- dissatisfaction. Highlighting the financial come Medicare beneficiaries to realize the protection Medicaid provides for the low- full potential of Medicare coverage, but the income population, only 12 percent of ability to maintain and expand that partner- beneficiaries who had Medicaid were ship to reach more of the low-income eld- unsatisfied with out-of-pocket costs. erly population is uncertain. Proposals to In sum, Medicare has contributed sub- increase financial obligations under Medi- stantially to the well-being of the elderly by care or shift the program from a defined facilitating access to care and reducing fi- benefit to defined contribution approach nancial burdens. The program provides could result in significant increases in ben- coverage of medical care for virtually all eficiary costs and undermine the adequacy elderly Americans, but Medicare's gaps in of protection for the poorest beneficiaries. coverage and financial obligations are par- In the past, Medicaid coverage has been ticularly difficult for poor and near-poor used to fill in and compensate for changes elderly people to handle. Medicaid plays an in Medicare coverage. However, proposals essential role in supplementing Medicare's to convert Medicaid to a block grant to coverage and makes Medicare work for States with a fixed and potentially reduced many low-income Medicare beneficiaries. federal contribution could restrict Medic- However, Medicaid's assistance does not aid's ability to serve as a Medicare safety extend to all low-income elderly people; net. Such a shift in Medicaid's structure those who are left to rely on Medicare could also jeopardize the continuation of alone are at substantial risk for access the current level of coverage Medicaid problems. provides to low income Medicare beneficiaries. As the future of Medicare and Medicaid IMPLICATIONS FOR THE FUTURE are debated, particular attention needs to be given to the elderly poor. One in 10 The three decades of experience with Medicare beneficiaries count on Medicaid Medicare as a primary insurer and Medic- to help with their medical expenses and aid as a supplement for the low-income Medicare financial obligations. Even with elderly demonstrate the importance of Medicaid assistance, the elderly poor de- both basic coverage for all elderly people vote one-third of their family income to and additional financial assistance for low- health expenses. Low-income elderly income elderly people. For those in the eld- Americans experience more health prob- erly low-income population jointly covered lems and have greater use of health serv- by Medicare and Medicaid, access to care, ices with the associated cost for treatment financial protection, and satisfaction with and medication than higher income eld- the cost of medical care are all notably erly. The 1 in 5 low-income Medicare ben- higher than for low-income elderly who eficiaries without Medicaid to supplement depend solely on Medicare. With the uni- Medicare are particularly at risk. Even versal base of Medicare as a building block with Medicare's basic protection, the cost for health care coverage, the elderly poor for premiums, cost-sharing, and uncovered and near-poor with Medicaid supplementa- services can compromise access to care. tion are able to access mainstream medical To assure Medicare's adequacy for care without severe financial burden. coverage in the future, it is important to

68 HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2 maintain assistance with financial obliga- Lyons, B., Rowland, D., and Hanson, K.: Another tions and additional benefits that Medicaid Look at Medicaid. Generations: 24-30, Summer 1996. provides today. It is critical to either main- Madans, J., and Kleinman, J.: Use of Ambulatory tain the Medicare-Medicaid partnership Care by the Poor and Nonpoor. In: Health United for the low-income elderly or to provide States, 1980. Hyattsville, MD. Public Health direct federal assistance to supplement Service, 1980. Medicare for the elderly poor. Without Manning, W.G., Newhouse, J.R., and Ware, J.E.: such guarantees, Medicare's notable The Status of Health in Demand Estimates: Be- yond Good, Excellent, Fair, and Poor. In Fuchs, progress in reducing gaps in service use C.R (ed.): Economic Aspects of Health. Chicago. between poor and non-poor elderly could Chicago University, 1981. be undone and millions of low income eld- Mentnech, R.: An Analysis of Utilization and Ac- erly Americans could have their access to cess from the National Health Interview Survey: medical care compromised. 1984-92. Appendix IX in Summary Report to Con- gress: Monitoring the Impact of Medicare Physician Payment Reform on Utilization and Access. Health ACKNOWLEDGMENTS Care Financing Administration, 1995. Moon, M., and Mulvey, J.: Entitlements and the The authors greatly appreciate the re- Elderly: Protecting Promises, Recognizing Reality. search assistance of Patricia Seliger and Washington, DC. The Urban Institute Press, 1996. Kristina Hanson of the Kaiser Family Foun- Neumann, P., Bernardin, M., Evans, W., and Bayer, E.: Participation in the Qualified Medicare dation and the computer programming as- Beneficiary Program. Health Care Financing sistance of Laurie Pounder of the Urban Review 17(2):169-78, Winter 1995. Institute. Rosenbach, M., Adamache, K., and Khandker, R.: Variations in Medicare Access and Satisfaction by REFERENCES Health Status: 1991-93. Health Care Financing Review 17(2):29-49, Winter 1995. Chulis, G., Eppig, F., and Poisal, J.: MCBS High- Rowland, D.: Measuring the Need for Home Care. lights: Ownership and Average Premiums for Health Affairs 8(4):39-51, 1989. Medicare Supplementary Insurance Policies. U.S. Bureau of the Census: Current Population Re- Health Care Financing Review 17(1):255-75, Fall ports, Consumer Income Series P60-189, Income, 1995. Poverty, and Valuation of NonCash Benefits: 1994. Davis, K., and Rowland, D.: Medicare Policy: New Washington. U.S. Government Printing Office, Directions for Health and Long-Term Care. Balti- 1996. more, MD. The Johns Hopkins University Press, Weissman, J., and Epstein, A.: Falling Through the 1986. Safety Net: Insurance Status and Access to Health Feder, J., and Lambrew, J.: Why Medicare Matters Care. Baltimore, MD. The Johns Hopkins Univer- to People Who Need Long-Term Care. Health Care sity Press, 1993. Financing Review 18(2):99-112, Winter 1996. Health Care Financing Administration: Medicaid Reprint Requests: Barbara Lyons, The Henry J. Kaiser Family Statistics: Program and Financial Statistics, Fiscal Foundation, 1450 G Street, NW, Suite 250, Washington, DC 20005. E-mail: [email protected] Year 1994. HCFA Pub. No. 10129. Washington. U.S. Government Printing Office, 1996. Liska, D., Obermaier, K., Lyons, B., and Long, P.: Medicaid Expenditures and Beneficiaries: National and State Profiles & Trends, 1984-1993. Report of the Kaiser Commission on the Future of Medicaid. Washington, DC. 1995.

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 69

Figure 1 Distribution of Elderly, by Poverty Level: 1994

Non-Poor 59%

NOTES: Estimates of non-institutionalized population. The Federal poverty level (FPL) in 1994 was $7,100 for a single individual and $9,000 for a couple. Poor is below 100 percent of FPL. Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non- poor is 200 percent of FPL or greater. SOURCE: (U.S. Bureau of the Census, 1996).

70 HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume ts, Number 2

Figure 4 Percent of Elderly Medicare Beneficiaries Reporting Fair or Poor Health: 1992

Total Poor Near-Poor Modest Non-Poor

NOTES: Includes non-institutional continuously enrolled beneficiaries. Poor is below 100 percent of the Federal poverty level (FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 73

Figure 6 Percent of Elderly Medicare Beneficiaries Needing Help With ADL Limitations: 1992

Total Poor Near-Poor Modest Non-Poor

NOTES: Includes non-institutional continuously enrolled beneficiaries. ADL is activity of daily living. Poor is below 100 percent of the Federal poverty level (FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

Table 1 Out-of-Pocket Payments Under Medicare for Hospital and Physician Services Hospital Insurance (Part A) Coverage for Inpatient Hospital Services Hospital Deductible $736 per Spell of Illness Coinsurance Days 61-90 $184 per Day Coinsurance for 60 Lifetime Reserve Days $368 per Day

Supplemental Medical Insurance (Part B) Coverage for Physician and Related Services Premium ($42.50 per Month) $510 per Year Deductible $100 per Year Coinsurance 20 Percent of Medicare Allowable Charges Effective January 1, 1996. SOURCE: Health Care Financing Administration: 1996 Data Compendium. Bureau of Data Management and Strategy. Washington. U.S. Government Printing Office, March 1996.

HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2 7 5

Figure 7 Out-of-Pocket Health Care Spending by the Elderly: 1994

NOTES: Spending includes acute care services and premiums. Poor is below 100 percent of the Federal poverty l evel (FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater. SOURCE: (Moon and Mulvey, 1996).

76 HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

Figure 8 Health Expenditures by the Elderly as a Share of Family Income: 1994

NOTES: Spending includes acute care services and premiums. Poor is below 100 percent of the Federal poverty level (FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater. SOURCE: (Moon and Mulvey, 1996).

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 77

Figure 9 Insurance Coverage of Elderly Medicare Beneficiaries: 1992

NOTE: Includes non-institutional continuously enrolled beneficiaries. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

7 8 HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 Figure 10 Insurance Status of Elderly Medicare Beneficiaries, by Poverty Level: 1992

Poor Near-Poor

15%

36%

21%

64%

∎ Medicare/Private 18%

Medicare Only

Modest Non-Poor Medicare/Medicaid 3% 5%

87% 95%

NOTE: Includes non-institutional continuously enrolled beneficiaries. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2 79 Figure 11 Distribution of Elderly Medicaid Population, by Eligibility: 1994

Other 1 4%

Categorically Needy 53%

NOTES: QMB/SLMB Is Qualified Medicare Beneficiary/Specified Low-Income Medicare Beneficiaries. Other includes eligibility through legislation prior to 1988. Total equals 4.0 million beneficiaries 65 years of age or over. SOURCE: (Health Care Financing Administration, 1994).

Figure 12 Medicaid Expenditures for the Elderly: 1993 Medicare Payments 8%

NOTE: Total expenditures equal $34 billion. SOURCE: (Liska et al., 1995).

80 HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

Figure 15 Percent of Elderly Beneficiaries With No Medicare Reimbursement for Services: 1992

I I I All Elderly Total Medicare Medicare/ Medicare/ Medicare Beneficiaries Only Private Medicaid

Low-Income Beneficiaries

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomes below 125 percent of the Federal poverty level. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

82 HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2

Figure 16 Percent of Elderly Beneficiaries With No Usual Source of Care: 1992

All Elderly Total Medicare Medicare/ Medicare/ Medicare Beneficiaries Only Private Medicaid Low-Income Beneficiaries

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomes below 125 percent of the Federal poverty level. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2 83

Figure 17 Percent of Elderly Beneficiaries Who Delayed Getting Care Due to Cost: 1992

C ww d a

All Elderly Total Medicare Medicare/ Medicare/ Medicare Beneficiaries Only Private Medicaid

Low-Income Beneficiaries

3 8 4 HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

Figure 18 Percent of Elderly Beneficiaries Who Are Unsatisfied With Out-of-Pocket Costs Paid for Medical Care: 1992

All Elderly Total Medicare Medicare/ Medicare/ Medicare Beneficiaries Only Private Medicaid

Low-Income Beneficiaries

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomes be- l ow 125 percent of the Federal poverty level. SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18, Number 2 85