Out-of-pocket burden of health care spending and the adequacy of the Medicare Part D low-income subsidy

Med Care. 2010 Jun;48(6):503-9. doi: 10.1097/MLR.0b013e3181dbd8d3.


Background: Evaluating the adequacy of Medicare prescription drug program (Part D) and its low-income subsidy (LIS) requires a comprehensive understanding of drug spending in relation to household resources.

Objective: : To estimate out-of-pocket health care costs in the year before Part D, in context of total household spending, health status, and LIS eligibility.

Research design: Nationally representative cross-sectional study.

Subjects: Two thousand two hundred thirty-one Medicare families in the 2005/2006 Health and Retirement Study.

Methods: We assessed health care costs as a share of household resources remaining after spending on essential housing, food, personal care, and transportation. Burdensome health care costs were defined as exceeding 40% of nonessential resources. We used logistic regressions to assess the probability of incurring burdensome health expenditures, controlling for LIS eligibility.

Results: In the year before Part D, more than half of Medicare families [56.0%; 95% confidence interval (CI): 55.3-59.9] experienced burdensome health care costs. Families in poor health allocated a median of 68.1% [interquartile range (IQR): 35.1-82.9] of nonessential resources to health care (compared with 34.0% median; IQR 11.9-52.2 among families in excellent health, P < 0.011). Most (64%) out-of-pocket health care spending was allocated to health insurance premiums and medications. As many as 26% of Medicare families had burdensome health care costs but were not eligible for LIS assistance.

Conclusions: Before Part D, burdensome health care expenditures were common in Medicare families. Our estimates of Part D and LIS benefits indicate a limited scope of relief.

Publication types

  • Research Support, N.I.H., Extramural
  • Research Support, Non-U.S. Gov't

MeSH terms

  • Adult
  • Aged
  • Confidence Intervals
  • Cost of Illness*
  • Deductibles and Coinsurance / statistics & numerical data*
  • Drug Prescriptions / economics*
  • Female
  • Financing, Personal / statistics & numerical data*
  • Health Expenditures
  • Humans
  • Income
  • Male
  • Medicare Part D / economics*
  • Middle Aged
  • Odds Ratio
  • Poverty / statistics & numerical data*
  • Socioeconomic Factors
  • United States / epidemiology