Americans who receive Medicare but make slightly too much money to qualify for supplemental coverage from Medicaid spend thousands more dollars on out-of-pocket medical expenses while receiving fewer outpatient services and prescriptions than people covered by both programs, according to new research published Monday.
"Earning a dollar more than the threshold causes you to have extraordinarily higher costs of care," said Eric Roberts, an assistant professor of health policy and management at the University of Pittsburgh's Graduate School of Public Health, in an interview with The Academic Times. "There's this underinsured population that's near poor that hasn't been appreciated in many policy discussions around Medicaid reform and yet needs assistance with out-of-pocket costs."
"Near poor" Americans, meaning people who make between 100% and 200% of the federal poverty level and are therefore not eligible for Medicare-supplementing Medicaid coverage, make up about 30% of individuals covered by Medicare, the researchers found in a paper for the peer-reviewed medical journal Health Affairs. The "near poor" categorization corresponds to a yearly individual income of $12,880 to $25,760 in 2021.
Just 47.5% of the near-poor group had supplemental health coverage, which helps pay for out-of-pocket costs, such as deductibles, copays and premiums, that are not covered by Medicare, according to the paper. By contrast, 73.3% of Medicare recipients who fell below the federal poverty level received supplemental Medicare coverage, due largely to Medicaid, the researchers found.
The researchers said this 25.8% gap between near-poor Medicare recipients and those below the poverty line constituted a serious "coverage cliff." The people affected by this gap paid significantly more money for fewer health services, the researchers found.
"We wanted to understand the implications of this Medicaid cliff on the use of care," Roberts said.
Over a two-year period, the typical near-poor Medicare recipient without supplemental coverage spent an additional $2,288 out of pocket on health care costs compared with a member of the group below the poverty line. Members of the near-poor group without supplemental coverage were also 33.1% more likely to spend more than one month's income on health care costs compared with their counterparts below the poverty line, even though they technically made more money overall.
Despite spending more money on health care, the near-poor group used 55% fewer outpatient and preventive health services than impoverished Medicare recipients with supplemental coverage. They also filled significantly fewer prescriptions, including for chronic-disease medications.
"These individuals cut back on outpatient care and prescription drugs," said Roberts, who wrote the paper alongside his Pitt colleagues Alexandra Glynn, Noelle Cornelio, Julie M. Donohue, Walid Gellad and Lindsay M. Sabik, as well as J. Michael McWilliams of Harvard University and Brigham and Women's Hospital. The researchers used data from the Health and Retirement Study, a longitudinal study of roughly 20,000 Americans age 50 or older, conducted by the University of Michigan and supported by the National Institute on Aging and the Social Security Administration. The researchers focused on data between 2008 and 2016.
The publication of the research, funded in part by a grant from the federal government's Agency for Healthcare Research and Quality, comes as lawmakers in Washington, D.C., consider overhauling the Affordable Care Act and explore lowering the Medicare eligibility age for the general U.S. population, from 65 to 60.
The affordability and access issues identified in the Health Affairs paper would not go away if federal lawmakers lowered the Medicare eligibility age, Roberts said. In fact, they would simply affect millions more people.
To address these issues, Roberts and his co-authors recommend that the cutoff for Medicare-supplementing Medicaid coverage be raised to 150% or 200% of the poverty line. From there, they said, coverage should be tapered off on a sliding scale so that an extra dollar in income can't lead to thousands of dollars in additional medical bills.
But changing eligibility for Medicare-supplementing Medicaid coverage doesn't currently seem to be a priority in Washington, Roberts said, as the Biden administration prioritizes supporting the Affordable Care Act's insurance marketplaces. Roberts wishes that proposals to expand Medicare-supplementing coverage would receive more attention.
"These policies kind of appear periodically but have not gained as much traction," he said. "There's a limited awareness that out-of-pocket costs can be really high in Medicare — and that burden can be really high on people with low or moderate income."
"Frankly, these ideas don't get the same level of attention as the exchanges in the Affordable Care Act," he said.
Roberts said he was inspired to study the issue when his grandmother, a recipient of both Medicare and Medicaid, had trouble affording copays for her medications.
"Copays are sort of a financial mechanism intended to introduce some consumer responsibility in health care, but for low-income individuals, the nominal copays that policymakers introduce can be more of a burden than a benefit," he said.
The paper, "Medicaid Coverage 'Cliff' Increases Expenses and Decreases Care for Near-Poor Medicare Beneficiaries," published April 5 in Health Affairs, was authored by Eric Roberts, Alexandra Glynn, Noelle Cornelio, Julie M. Donohue, Walid Gellad and Lindsay M. Sabik, University of Pittsburgh Graduate School of Public Health; and J. Michael McWilliams, Harvard University and Brigham and Women's Hospital.