SOURCE: Congressional Budget Office estimates based on the 1981 Medicare History File. There are two major protections from the high out-of-pocket costs of medical care, Medigap insurance and Medicaid. Combined Medigap and Medicaid protected 20 million or 80 percent of the noninstitutionalized elderly from potential risks of catastrophic illness. Chart 4-12 shows, 18 million-or 72 percent-of the elderly were covered by some form of private supplementary insurance. The likelihood of an older person having private insurance rises with family income. While 44 percent of those with incomes under $5,000 were covered, 87 percent of those with incomes greater than $25,000 had private supplemental insurance. Annual Medigap premiums averaged roughly $300 to $400 per person in 1984.32 32 Congressional Budget Office, testimony before the Committee on Energy and Commerce, U.S. House of Representatives, March 1986. CHART 4-10 WHERE THE OUT OF POCKET DOLLAR FOR THE ELDERLY GOES: 1984 SOURCE: Health Care Financing Administration, Office of A recent report provided by the Congressional Budget Office described the average liability of the Medicare population for 1987. For those who required two or more hospitalizations (7 percent of enrollees), out-of-pocket payments through Medicare copayments and deductibles total $2,037. Enrollees will pay on average $728 to participate in the Medicare Program in 1987 (chart 4-11). SOURCE: Congressional Budget Office estimates based on the 1981 Medicare History File. There are two major protections from the high out-of-pocket costs of medical care, Medigap insurance and Medicaid. Combined Medigap and Medicaid protected 20 million or 80 percent of the noninstitutionalized elderly from potential risks of catastrophic illness. Chart 4-12 shows, 18 million-or 72 percent-of the elderly were covered by some form of private supplementary insurance. The likelihood of an older person having private insurance rises with family income. While 44 percent of those with incomes under $5,000 were covered, 87 percent of those with incomes greater than $25,000 had private supplemental insurance. Annual Medigap premiums averaged roughly $300 to $400 per person in 1984.32 32 Congressional Budget Office, testimony before the Committee on Energy and Commerce, U.S. House of Representatives, March 1986. FAMILY INCOME (In thousands of dollars) SOURCE: Congressional Budget Office tabulations of Survey of Income and Program Participation (SIPP). NOTE: People covered under both a group and an individual plan are likely to have been classified above as covered by group insurance. (NOTE.-Unless otherwise noted, data for health care expenditures for the elderly in this section are from: Waldo, Daniel and Lazenby, Helen; Demographic characteristics and health care use and expenditures by the aged in the United States: 197784, Health Care Financing review; Fall, 1984; Volume 6, No. 1.) MEDICARE In 1985, Medicare covered 45 percent of all personal health care expenditures for the elderly.33 Medicare's role primarily involves financing acute care services. Costs for hospitals, which account for over 69 percent of all the dollars Medicare spends for health care, are fueling Medicare's growth (chart 4-13). Seventy-three percent of the cost of hospital services and 44 percent of the cost of physicians' services were paid by the program in 1984. Medicare spending for home health care has grown dramatically since 1968; from 33 Congressional Budget Office, testimony before the Committee on Energy and Commerce, U.S. House of Representatives, March 1986. |