Out-of-Pocket Medical Costs to Rise for Seniors

This article discusses several studies that project in the next couple of decades America’s seniors will pay greater shares of their income in medical expenses than seniors are doing today. The researchers made these projections without considering any future changes in Medicare. They also don’t include long-term care costs. They used a model that seeks to assess a number of different variables and makes assumptions about how factors will develop in the future. So, there’s a lot of uncertainty in the conclusions. Small changes in the assumptions change the results. Also, these aggregate results don’t forecast what an individual person or couple will pay.

What will these and other changes mean for those 65 and older? By 2035, median out-of-pocket spending for medical care—both insurance premiums and direct costs such as co-pays and deductibles—will rise from 10 percent of income to 14 percent (Remember: median means that half will pay more and half will pay less). But there will be big differences depending on a senior’s income and medical needs.

For example, the very poorest will continue to pay almost nothing out-of-pocket, thanks to Medicaid. Still, among the lowest-income one-fifth of older households (who among all households made an average of about $22,800 in 2015), median health spending will rise from 5 percent of their income to 25 percent. The sickest will pay half of their income on medical care.

Among those seniors in the group of all households that made an average of about $43,500 in 2015 median spending will grow from 21 percent of income to 26 percent. Out-of-pocket costs for those in poor health will rise from 23 percent to 29 percent.