The Health Insurance Costs Threatening Our Seniors

Expenses will continue to rise next year — for one key reason

Our older Americans aren’t getting much of a raise next year in Social Security benefits. Projections for 2017 show a 0.3 percent increase — which amounts to only about $4 or $5 (yes, that’s it).The good news about this lackluster increase is that it means a minimal increase in monthly premiums for Medicare insurance plans.

That doesn’t mean some of the old problems with Medicare are going away. Experts actually predict that Medicare costs will continue to grow, hitting our oldest generation the hardest in the process.

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It’s not that Medicare spending is so much higher for seniors than it is for the rest of the population. In 2010, the average Medicare recipient paid upward of $4,700 a year in expenses. But in proportion to their annual salaries, those expenses amounted to 20 percent of median income. The burden of senior care impacts more than just the older generations. U.S. businesses lose an estimated $33.6 billion each year in productivity due to full-time workers also providing care to their aging parents.

The out-of-pocket costs and caregiving costs rack up quickly. “What’s most important about the Medicare benefit — and different from private insurance — [is that] there’s no limit on out-of-pocket expenses,” said Ken Thorpe, a former White House health policy adviser who chairs the Partnership to Fight Chronic Disease in Washington, D.C. “That makes Medicare incredibly unusual because you can potentially rack up thousands and thousands of dollars in hospitalization costs and part B spending.”

“Diabetes has basically doubled. There are more hypertensive patients. That really is the key driver of Medicare spending going up,” said one analyst.

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If a senior had a particularly bad year and racked up about $100,000 in expenses, which isn’t unheard of, he or she would need to pay $20,000 in out-of-pocket costs, said Thorpe. Whereas most private insurance plans cap spending around $5,000, the Medicare parts A and B plans have no such limitations.

“At the very least, I would put in a limit on out-of-pocket payments and make it look more like a private plan,” Thorpe told LifeZette. As it is now, “Medicare can work only if you enroll in Medicare Advantage or buy a Medigap plan” — both of which help to limit expenses.

These costs pose serious problems for a large portion of Medicare customers because a higher percentage of seniors suffer from chronic illness than ever before. “If you go back to 1990, 80 or 90 percent of the growth of Medicare spending was due to a rising prevalence of chronically ill patients,” Thorpe said. “Diabetes in the program has basically doubled. There are more hypertensive patients. That really is the key driver of why Medicare spending is going up.”

So even if policymakers decide to reform the program — costs will continue to increase for chronically ill patients.

Related: Risk of ‘Mass Exodus’ of Doctors from Medicare

New developments to promote healthy lifestyles among seniors could yield promising results, said Thorpe. Beginning in 2018, Medicare will cover a diabetes prevention program, consisting of an 18-week course that gives diet, exercise, and nutrition counseling and coaching to seniors. Since half of the Medicare population is pre-diabetic, this program could do a great deal to prevent the disease. In a small case study, Thorpe says the course reduced the incidence of diabetes by as much as 71 percent.

“We’ll be following the implementation of that program very closely,” he said.

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