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Older Adults Struggle with Medical Costs … while Private Insurers Profit

August 19, 2023

Summary: Reports from two leading foundations find that older adults – those insured privately and those in Medicare – face huge financial challenges to getting health care. Our system built on private insurance has failed. It’s time for public insurance administration: single payer.

Can Older Adults with Employer Coverage Afford Their Health Care?
The Commonwealth Fund
August 10, 2023
By Lauren A. Haynes & Sara R. Collins

Among older adults with employer coverage:

*  Nearly half of lower-income older adults, and more than one-third of those with moderate income, said it was very or somewhat difficult to afford their premiums.

*  Fifty-four percent of those with low income and nearly one-third with moderate income were underinsured, meaning that they had high out-of-pocket costs and/or deductibles relative to their income.

*  Nearly half of those with low income reported skipping or delaying needed care because of cost.

*  Difficulties paying medical bills and paying off medical debt loads affected 44 percent of older adults with low income and two of five of those with moderate income.

*  Sixty-three percent of those who struggled with medical bills and debt were not confident they have enough money to retire – more than double the rate for older adults without problems paying their medical bills.

The survey data in this brief indicate employer health insurance is failing many older adults, especially those with low and moderate incomes.

Medicare Households Spend More on Health Care Than Other Households
July 19, 2023
By Nancy Ochieng, Juliette Cubanski, & Anthony Damico

The health care spending burden was twice as large for Medicare households than for non-Medicare households in 2021, measured by average health care spending as a share of total household spending, and one in three Medicare households spend at least 20% of their household budgets on health care.

With health care use increasing with age and income falling as people retire, it’s not unexpected that health care is a bigger cost burden for Medicare households.

Comment by: Don McCanne

It is hardly a wonder why we have problems with health care financing in the United States when these studies show that two of our best programs – employer-sponsored health plans for employees and their families, and Medicare for the retired and long-term disabled – fail to provide adequate financial protection for the medical needs of older Americans. Since these are amongst our best insurance, how can we possibly expect the rest of the system to work well for us?

We are already spending enough money to provide all reasonable, beneficial health care for everyone without inducing financial hardship on anyone. Obviously we are doing something very wrong. Economists Liran Einav and Amy Finkelstein recently pointed us in the right direction by proposing that we cover everyone automatically with care that is free – no premiums, no deductibles, no copays. Instead, the system should be financing equitably by progressive taxation. That way it is affordable for everyone. The universal “basic” insurance needs to cover all reasonable, beneficial health care, though defining “basic” is fraught.

This situation reflects a serious conundrum with health care financing in the US. Even though two-thirds of health care dollars come from the government, we rely mainly on private health insurance administrators. This includes Medicare Advantage, Medicaid managed care, and private insurance including for government workers. The insurers’ mission is to move a large slice of our health care dollars to CEO salaries and shareholders. This aligns with the American ideology of wealth building, creating more billionaires than our international competitors.

Come now. Should that be the primary mission of our health care administrators? Of course not! Their primary mission should be to move health care to the people, the patients, all of the patients, and they need to use our health care dollars to do that. Our current system has demonstrated beyond any doubt whatsoever that private administrators have been and always will be on the wrong mission, and we need to replace them with public administrators who will always pursue a mission for the public good.

It will be our public administrators who will have the mission to cover care that is reasonable, beneficial, and at the right prices. Single payer!

It’s the public administrators that I want running the program that will take care of financing the health of me and my family, thank you!

About the Commentator, Jim Kahn

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Jim (James G.) Kahn, MD, MPH (editor) is an Emeritus Professor of Health Policy, Epidemiology, and Global Health at the University of California, San Francisco. His work focuses on the cost and effectiveness of prevention and treatment interventions in low and middle income countries, and on single payer economics in the U.S. He has studied, advocated, and educated on single payer since the 1994 campaign for Prop 186 in California, including two years as chair of Physicians for a National Health Program California.

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