By Paula Chatterjee, MD, MPH; Eliza Macneal, MS; and Syama Patel, MPH
Medicare was created to ensure older adults in the U.S. have healthcare coverage while protecting them from financial ruin. But for at least 10 million older adults today, one of the most influential insurance programs in the U.S. is failing. For this financially precarious population of Medicare beneficiaries, a hospitalization costs around $1,600 and triggers an immediate financial crisis. And with the risk of hospitalization rising with age, this kind of threat is all but unavoidable. Nearly 60 years after its founding, Medicare is full of coverage gaps and may be driving many near-poor older Americans into a poverty trap.
We found that 45% of near-poor older adults would not have enough money in their checking and savings accounts to pay an unexpected bill of $1,600. If we consider other sources of wealth (such as stocks, bonds, and individual retirement accounts), between 39% and 51% of near-poor older adults (over 10 million people) would still lack sufficient resources to pay for a hospitalization without becoming impoverished. The risk is far higher for older adults who are Black or Hispanic. It’s also higher for older adults with lower levels of education and more chronic ailments.