March 31, 2022

Retirees spend $1,500 more per year, on average, for medical care after a diagnosis of a serious condition like lung disease or diabetes.

Often, the solution for individuals who can’t afford such big bills is to scrimp on care or avoid the doctor altogether. But older homeowners can get access to extra cash if they withdraw some of the home equity they’ve built up over the years.

While the money clearly provides financial relief for retirees, a new study out of Ohio State University finds that it is also good for their health. Every $10,000 that Medicare beneficiaries extracted from their homes greatly improved their success in controlling a chronic or serious disease.

Among the retirees who had hypertension or heart disease, for example, one standard used to determine whether the condition was under control was whether blood pressure levels stayed below 140/90, which the medical profession deems an acceptable level. The people who tapped their home equity were more likely to stay below these levels than those who did not.

This is one of several studies in recent years to tie financial security to home equity, a resource many retirees are reluctant to tap. A study in 2020 found that older homeowners were less likely to skip medications due to cost after they had extracted equity through a refinancing, home equity loan, or reverse mortgage.

But this new research is the first attempt to connect the strategy to retirees’ actual health. The analysis followed the health of more than 4,000 homeowners for up to 15 years after they were diagnosed with one of four conditions – lung disease, diabetes, heart conditions, or cancer. …Learn More

Research

January 21, 2020

Most people have already left their jobs before applying for federal disability benefits. The problem for older people is that when they are denied benefits, only a small minority of them ever return to work.

Applicants to Social Security’s disability program who quit working do so for a combination of reasons. They are already finding it difficult to do their jobs, and leaving bolsters their case. However, when older people are denied benefits after the lengthy application process, it’s very challenging to return to the labor force, where ageism and outdated skills further complicate a disabled person’s job search.

A new study looked at 805 applicants – average age 59 – who cleared step 1 of Social Security’s 5-step evaluation process: they had worked long enough to be eligible for benefits under the disability program’s rules. The researchers at Mathematica were particularly interested in the applicants rejected either in steps 4 and 5.

Of the initial 805 applicants, 125 did not make it past step 2, because they failed to meet the basic requirement of having a severe impairment. In step 3, 133 applicants were granted benefits relatively quickly because they have very severe medical conditions, such as advanced cancer or congestive heart failure.

The rest moved on to steps 4 and 5. Their applications required the examiners to make a judgment as to whether the person is still capable of working in two specific situations. In step 4, Social Security denies benefits if an examiner determines someone is able to perform the same kind of work he’s done in the past. In step 5, benefits are denied if someone can do a different job that is still appropriate to his age, education, and work experience.

In total, just under half of the 805 applicants in the study did not receive disability benefits. …Learn More

October 24, 2019

Reforms to Medicare Part D under the Affordable Care Act brought significant relief to retirees by reducing the share of medication costs they must pay out of their own pockets.

But with the healthcare reform now nearly a decade old, other developments have taken over that will drive up drug costs for the most vulnerable retirees – the biggest users of expensive brand name drugs. Although only a few million people will be affected, they are already saddled with the highest spending burden.

This vulnerable group could get some help from Congress. There is bipartisan support for placing an absolute limit on how much Part D policyholders must pay in total for their prescriptions, said Juliette Cubanski, associate director of the Medicare policy program at the Kaiser Family Foundation.

“That’s a positive development,” she said, “but there are also several areas of disagreement in the legislation being considered on the House and Senate sides.”

Under the Affordable Care Act (ACA), retirees are required to pay 25 percent of their total drug costs up to the annual threshold that qualifies them for catastrophic coverage – this dollar threshold is the total of their own payments plus the price discounts from manufacturers of brand name drugs. The upshot in 2020 for retirees is that those with the highest need could spend about $375 more out of their own pockets before they enter Part D’s less-onerous catastrophic coverage phase, according to a Kaiser analysis. And that’s just the increase for next year – their outlays will rise over the next decade.
 
Once retirees enter the catastrophic phase, they are protected, because Medicare begins picking up the vast majority of the tab. But out-of-pocket costs are rising because the ACA’s controls on the spending threshold they must cross to qualify for catastrophic coverage have ended. …Learn More

May 30, 2019

The evidence continues to pile up: workers are having a very hard time affording their high-deductible health plans, which have gone from rare to covering nearly a third of U.S. workers.

Between 2008 and 2018, the deductibles in employer health plans more than tripled – growing much faster than earnings. Workers’ full insurance coverage doesn’t kick in until they pay the deductibles, which now exceed $3,000 for individuals and $5,000 for families in the highest-deductible plans. Add to that a 50 percent hike in premiums during that time.

Some 156 million people get health insurance through work, and they’re largely grateful to have it. They blame rising medical costs on insurers and pharmaceutical companies – and not their employers and healthcare providers – a new Kaiser Family Foundation survey said.

One in four said medical bills or copayments for drugs and doctor visits are severely straining their budgets, and the Commonwealth Fund, another healthcare researcher, estimates that the typical worker spent about 12 percent of his income on deductibles and premiums in 2017, compared with 8 percent in 2008 – the figure is closer to 15 percent in Louisiana and Mississippi.

The solution is often to forgo or postpone care. And the higher an employee’s deductible – no surprise – “the more likely they are to experience problems affording care or putting off care due to cost,” Kaiser said. Inadequate medical care is especially dangerous for people with chronic conditions. …Learn More

April 4, 2019

“We are rapidly approaching the point where we will simply be unable to afford medical care,” says Dr. Edward Hoffer. This is no exaggeration, according to the Henry J. Kaiser Family Foundation: health insurance deductibles and copayments are rising so fast that a significant share of working families have great difficulty paying for their care.

“We as a society have to decide whether healthcare is a right or a privilege,” Dr. Hoffer said. “I happen to think it’s a right. We can’t all drive a Mercedes but every American deserves to have access to healthcare.”

His book, “Prescription for Bankruptcy,” provides his insider’s view of why healthcare costs keep going up. For 46 years, he has worked in Massachusetts as a cardiologist, public health official, and hospital and private practice administrator.

Dr. Edward Hoffer

Question: How do U.S. medical costs compare with other countries?

Dr. Hoffer: The U.S. spends roughly twice as much per capita on healthcare as most other countries. Switzerland is nowhere near us, and they’re more expensive than the rest of Europe. Canada, Germany, France – they all have excellent healthcare systems and spend about half per capita what we do.

Q: What does this have to do with patient care?

A family policy costs the employer roughly $20,000 per employee per year, and many employers have been reacting by increasing employees’ deductibles and copays.  If you’re the line worker who’s making $50,000 and you’re faced with a $5,000 deductible, you behave like somebody who doesn’t have insurance. You skip your preventive care or you avoid a medication because all of this comes out of your pocket. Women are deciding not to get a mammography or someone who has a colonoscopy recommended to them looks at the prices and says, ‘Maybe I’ll put it off.’

Q: You criticize high pay for hospital administrators. You once visited a Boston hospital CEO whose office was so large that you “could barely see him at the far end.” But aren’t administrators crucial to the system? …Learn More

Money Culture

February 21, 2019

Medicare Part D, passed in 2003, has significantly reduced seniors’ spending on prescription drugs. But the coverage hasn’t protected Leslie Ross from near calamity.

The 72-year-old diabetic needs insulin to stay alive. The prices of these drugs have skyrocketed, forcing her to supplement her long-lasting insulin, Lantus, with more frequent use of a less-expensive insulin. This one remains in her body only four hours, requiring more vigilance to control her blood sugar.

To cut her Lantus bills – nearly $1,700 this year – she has sometimes resorted to buying unused supplies from other diabetics on eBay. “You take your chances when you do stuff like that,” she said. “I checked that the vial hasn’t been opened. It still had the lavender cap on it.” She also reuses syringes.

The issue facing retirees like Ross is an erosion of financial protections under their Part D prescription drug coverage because of spiraling drug prices. New medications are hitting the market at very high initial prices, and the cost of older, once-affordable drugs increase year after year, said Juliette Cubanski, director of Medicare policy for the Henry J. Kaiser Family Foundation.

“A fundamental problem when it comes to people’s ability to afford their prescription drugs is the high prices charged for many of these medications,” she said.

Part D has no annual cap on how much retirees have to pay out of their own pockets for prescriptions. A new Kaiser report finds that retirees’ spending on specialty drugs – defined as costing more than $670 per month – can range from $2,700 to $16,500 per year. Specialty drugs include Lantus, Zepatier for hepatitis C, Humira for rheumatoid arthritis, and cancer drugs like Idhifa, which treats leukemia.

They “can be a real retirement savings drainer,” especially for very sick seniors, said Mary Johnson of the Seniors Citizens League, a non-profit advocacy group. …Learn More

September 27, 2018

One in five Americans is burdened by unpaid medical bills that have been sent to a collection agency. Medical debt is the most common type of debt in collections.

This burden falls hardest on lower-paid people, who have little money to spare between paychecks.  These are the same people the 2014 Medicaid expansion under the Affordable Care Act (ACA) was designed to help.  Some 6.5 million additional low-income workers were getting insurance coverage just two years after Medicaid’s expansion, which increased the program’s income ceiling for eligibility in the states that chose to adopt the expansion.

The evidence mounts that this major policy has improved the precarious finances of vulnerable households.

A new study of the regions of the country with the largest percentage of low-income residents found that putting more people on Medicaid has reduced the number of unpaid bills of all kinds that go to collection agencies and cut by $1,000 the amounts that individuals had in collections.

The impact in states that did not expand Medicaid is apparent in Urban Institute data. Five of the 10 states with the highest share of residents owing money for medical bills – North Carolina, South Carolina, Oklahoma, Tennessee and Texas – decided against expanding their Medicaid-covered populations under the ACA option. About one in four of their residents have medical debt in collections.

That’s in contrast to Minnesota, which has one of the most generous Medicaid programs in the country and the lowest rate of medical debt collection of any state (3 percent of residents), said Urban Institute economist Signe-Mary McKernan.

“Past due medical debt is a big problem,” she said.  “When [people] have high-quality health care, it makes a difference not only in their physical health but in their financial health.” …
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