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LTC Bullet:

What's Wrong with this Picture?

Friday January 7, 2000


The AARP Public Policy Institute recently published a new summary of out-of-pocket health care expenditures by Medicare beneficiaries over the age of 65.

The AARP report says: "Medicare beneficiaries age 65 and older are projected to spend about $2,430, or 19 percent of income, out-of-pocket for health care in 1999. Payments for health care goods and services-Medicare deductibles and coinsurance, and payments for goods and services not covered by Medicare, such as prescription drugs and dental care--account for over half of this amount (54 percent). The remaining 46 percent is spent on premium payments for Medicare Part B, private insurance and Medicare+Choice plans. THE ESTIMATES DO NOT INCLUDE THE COST OF HOME CARE OR LONG-TERM NURSING HOME CARE." (Emphasis added.)

It is interesting to note that elderly Americans spent only 10.6 percent of their income for health care expenses in 1961 before Medicare, compared to 19 percent today. This huge cost does not even include long-term care costs, AARP informs us. Expenditures for institutional long-term care account for over 80 percent of all out-of-pocket expenses by the elderly that exceed $3,000 per year, while hospital care consumes only 10 percent. Nevertheless, most seniors have "Medicare supplemental insurance" averaging $1,360 in annual premiums while only seven percent have LTC insurance against this greater risk.

At the signing ceremony for the Medicare legislation in July 1965, President Lyndon Johnson promised: "No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations." This broken promise is terribly sad. But when today's less realistic political promises to boomers and their progeny are broken, the consequences will be truly tragic.

Source: David Gross and Normandy Brangan, "Out-of-Pocket Spending on Health Care by Medicare Beneficiaries Age 65 and Older: 1999 Projections," AARP Public Policy Institute, Washington, DC, December 1999.