Out-of-pocket health care costs among older Americans

J Gerontol B Psychol Sci Soc Sci. 2000 Jan;55(1):S51-62. doi: 10.1093/geronb/55.1.s51.


Objectives: Despite Medicare, elderly persons are exposed to substantial out-of-pocket health care cost burdens. As Medicare reform proposals are considered, it is important to determine the current size, distribution, and burden of these expenditures.

Methods: Data from the 1995 Medicare Current Beneficiary Survey were used to analyze out-of-pocket expenditures and their burden in relation to income; the proportion of total health care expenditures paid out-of-pocket; and the role of pharmacy, hospital, physician, and other services in overall out-of-pocket spending.

Results: Expenditures averaged 19.0% of income, for full-year Medicare beneficiaries alive during all of 1995. In bivariate analyses, higher-burden subgroups included those in poor health (28.5% of income), older than age 85 (22.4%), and with income in the lowest quintile (31.5%, despite Medicaid coverage for some). Those relying on fee-for-service Medicare only (23.0%) or with self-purchased supplemental insurance (25.5%) experienced more burden than those with employer-sponsored coverage or in HMOs. In multivariate analyses, functional impairment, number of medical conditions, self-perceived health and privately-purchased supplemental coverage were each associated with higher out-of-pocket burden, while HMO participation was associated with lower burden. Out-of-pocket expenditures averaged 15.2% of total health care expenditures with the proportion highest (22.6%) for those with no supplemental coverage. More than half of out-of-pocket payments for health care services were for prescription drugs and dental services.

Discussion: Out-of-pocket cost burdens fall most heavily on those with chronic health conditions and without employer-subsidized supplemental coverage or Medicaid. Impact of Medicare reform proposals on these subgroups needs to be carefully evaluated.

Publication types

  • Research Support, Non-U.S. Gov't
  • Research Support, U.S. Gov't, P.H.S.

MeSH terms

  • Aged
  • Aged, 80 and over
  • Cost of Illness*
  • Female
  • Financing, Personal / economics*
  • Geriatric Assessment
  • Health Care Costs / statistics & numerical data*
  • Health Expenditures / statistics & numerical data
  • Humans
  • Income
  • Male
  • Medicaid / economics
  • Medicare / economics*
  • United States