WILL YOU STILL NEED ME? THE HEALTH AND FINANCIAL SECURITY OF OLDER AMERICANS FINDINGS FROM THE COMMONWEALTH FUND SURVEY OF OLDER ADULTS Sara R. Collins, Karen Davis, Cathy Schoen, Michelle M. Doty, Sabrina K. H. How, and Alyssa L. Holmgren The Commonwealth Fund June 2005 ABSTRACT: The Commonwealth Fund Survey of Older Adults, conducted from September to November of 2004, presents new information on the health and financial security of adults ages 50 to 70. On average, older adults have high rates of chronic disease and high out-of-pocket medical spending. Rising out-of-pocket health costs, sluggish wage growth, and erosion of retiree health benefits threatens older adults’ ability to save for retirement. The survey finds widespread support among older adults for policies that would help them save for their future health and long-term care costs not covered by Medicare. It also finds broad support for policies that would allow them to buy into Medicare before age 65. Support for this research was provided by The Commonwealth Fund. The views presented here are those of the authors and not necessarily those of The Commonwealth Fund or its directors, officers, or staff. Additional copies of this Commonwealth Fund publication are available on the Fund’s Web site at www.cmwf.org. To learn about new Fund publications when they appear, visit the Fund’s Web site and register to receive e-mail alerts. Commonwealth Fund pub. no. 840. CONTENTS List of Figures and Tables................................................................................................ iv About the Authors.......................................................................................................... vi Acknowledgment .......................................................................................................... vii Executive Summary...................................................................................................... viii Introduction .................................................................................................................... 1 The Extent and Quality of Insurance Coverage Among Older Adults: How Well Are They Protected?................................................................................. 1 The Importance of Gaining Medicare Coverage: Views of Older Adults ........................ 12 Older Americans Are Concerned About Their Financial and Health Security ................ 17 Older Adults Support Policy Solutions to Improve Their Health and Financial Security .............................................................................................. 22 Conclusion .................................................................................................................... 27 Tables............................................................................................................................ 29 Appendix. Survey Methodology .................................................................................... 43 Notes............................................................................................................................. 44 iii LIST OF FIGURES AND TABLES Figure ES-1 Majorities of Adults Across Political Affiliation Express Interest in Medicare Health Accounts ...................................................... ix Figure ES-2 Percent of Adults Ages 50–64 Who Are Very/Somewhat Interested in Receiving Medicare Before Age 65, by Insurance Status and Income........ x Figure ES-3 Access Problems Because of Cost ............................................................. xi Figure ES-4 More than One-Third of Older Adults Report Medical Bill Problems............................................................................. xii Figure 1 Low-Income Adults Have High Rates of Chronic Conditions.................. 2 Figure 2 Insurance Instability Among Adults 50–64 Highest Among Those with Low Incomes.................................................................................... 3 Figure 3 More than Half of Older Adults with Individual Coverage Spend $3,600 or More Annually on Premiums ......................................... 5 Figure 4 More than Two of Five Older Adults with Individual Coverage Have Annual Deductibles of $1,000 or More............................................ 6 Figure 5 Annual Out-of-Pocket Medical Expenses, Including Prescription Drugs ... 7 Figure 6 Percent of Insured Older Adults Who Are “Underinsured” ...................... 8 Figure 7 Access Problems Because of Cost .............................................................. 9 Figure 8 Access Problems in Past Year, by Size of Deductible ............................... 10 Figure 9 More than One-Third of Older Adults Report Medical Bill Problems .... 11 Figure 10 Medical Bill or Debt Problems in Past Year, by Size of Deductible ......... 12 Figure 11 Percent of Medicare Beneficiaries Who Were Uninsured Just Before Medicare............................................................................... 13 Figure 12 Importance of Becoming Eligible for Medicare ....................................... 14 Figure 13 Ratings of Insurance Coverage ............................................................... 14 Figure 14 Medicare Beneficiaries and Older Adults with Employer Coverage Are Most Satisfied with Health Care Quality .......................................... 16 Figure 15 Medicare Beneficiaries and Older Adults with Employer-Sponsored Coverage Are Most Confident in Getting the Best Medical Care ............ 17 Figure 16 Two of Five Older Adults Are Not Confident in Their Retirement Security: Older Adults with Low Incomes Are the Least Confident ........ 18 Figure 17 Total Bank or Stock Market Savings ....................................................... 19 Figure 18 Total Bank or Stock Market Savings, by Income, Adults Ages 50–70...... 19 Figure 19 The Quality of Retiree Health Benefits Is Eroding ................................. 20 Figure 20 Majorities of Older Adults Are Worried They Won’t Be Able to Afford Needed Medical Care.............................................................. 21 iv Figure 21 Interest in Medicare Health Accounts Is Strong Across Income Group............................................................................. 22 Figure 22 Percent of Adults Ages 50–64 Who Are Very/Somewhat Interested in Receiving Medicare Before Age 65, by Insurance Status and Income .............................................................. 23 Figure 23 Amount Willing to Pay to Buy into Medicare Before Age 65 ................. 24 Figure 24 How Interested Would You Be in Paying an Extra $100 per Month to Medicare to Have All Your Health Services, Including Rx, Covered? .... 25 Figure 25 If Medicare or Your Insurance Plan Charged You a Lower Monthly Premium If You Agreed to Go to Doctors That Provided the Best Care at the Lowest Cost, Would You Participate, Even If It Meant You Had to Change Doctors?...................................................... 26 Figure 26 Should Medicare or Your Insurance Plan Require You to Sign Up for a Doctor Who Would Be Your Regular Source of Care?.................. 26 Table 1 Demographic Characteristics of Older Adults by Age and Insurance........ 29 Table 2 Health Status of Older Adults Ages 50 to 70, by Age and Poverty Status .................................................................................. 30 Table 3 Insurance History of Older Adults Ages 50 to 70, by Age and Poverty Status .................................................................................. 31 Table 4 Health Insurance Expenses of Older Adults Ages 50 to 70, by Age and Insurance.............................................................................. 32 Table 5 Health Care Expenses of Older Adults Ages 50 to 70, by Age and Insurance.............................................................................. 33 Table 6 Access Barriers and Medical Bill Problems by Age and Insurance ............ 34 Table 7 Access Barriers and Medical Bill Problems, by Age and Poverty .............. 35 Table 8 Medicare Beneficiaries: Insurance History, Ratings of Medicare, and Comparisons to Insurance before Eligible for Medicare .................... 36 Table 9 Experiences with Health Insurance ......................................................... 37 Table 11 Trust in Sources of Coverage for Older Adults Under Age 65................. 38 Table 12 Retirement Security: Confidence, Savings, and Importance of Health Insurance................................................................................. 39 Table 10 Concerns about Affordability, Confidence in Future Care, and Satisfaction with Quality of Care ...................................................... 40 Table 13 Interest in Tax-Free Savings Accounts for Long-Term Care and Other Medical Expenses................................................................... 41 Table 14 Interest in Enrolling in Medicare Before Age 65 ..................................... 42 v ABOUT THE AUTHORS Sara R. Collins, Ph.D., is senior program officer for health policy, research, and evaluation at The Commonwealth Fund. She is an economist whose responsibilities include survey development, research, and policy analysis, as well as program development and management of the Fund’s Health Care Coverage and Access Program. Prior to joining the Fund, Dr. Collins was associate director/senior research associate at the New York Academy of Medicine, Division of Health and Science Policy.. Previously, she was an associate editor at U.S. News & World Report, where she wrote articles on economics and health care. She was also a senior health policy analyst in the New York City Office of the Public Advocate. She holds an A.B. in economics from Washington University and a Ph.D. in economics from George Washington University. Karen Davis, Ph.D., president of The Commonwealth Fund, is a nationally recognized economist with a distinguished career in public policy and research. Before joining the Fund, she served as chairman of the Department of Health Policy and Management at The Johns Hopkins Bloomberg School of Public Health, where she also held an appointment as professor of economics. She served as deputy assistant secretary for health policy in the Department of Health and Human Services from 1977 to 1980 and was the first woman to head a U.S. Public Health Service agency. A native of Oklahoma, she received her doctoral degree in economics from Rice University, which recognized her achievements with a Distinguished Alumna Award in 1991. Ms. Davis has published a number of significant books, monographs, and articles on health and social policy issues, including the landmark books Health Care Cost Containment; Medicare Policy; National Health Insurance: Benefits, Costs, and Consequences; and Health and the War on Poverty. Cathy Schoen, M.S., is vice president for health policy, research, and evaluation at The Commonwealth Fund and has oversight responsibilities for the Fund’s survey work and programs on health care coverage and access. Previously, Ms. Schoen was director of special projects at the University of Massachusetts Labor Relations and Research Center and on the research faculty of the UMass School of Public Health. During the 1980s, she directed the Service Employees International Union’s Research and Policy Department in Washington, D.C. Earlier, she served as a member of the staff of President Carter’s national health insurance task force and as a senior health advisor during the 1988 presidential campaign. Prior to federal service, she was a research fellow at the Brookings Institution. She holds an undergraduate degree in economics from Smith College and a graduate degree in economics from Boston College. She is the author and coauthor of many publications on health care coverage and quality issues. vi Michelle McEvoy Doty, Ph.D., a senior analyst for the Health Policy, Research, and Evaluation Department at The Commonwealth Fund, conducts research examining health care access and quality among vulnerable populations and the extent to which lack of health insurance contributes to barriers to health care and inequities in quality of care. She received her M.P.H. and Ph.D. in public health from the University of California, Los Angeles. Sabrina K. H. How is a research associate for the Commission on a High Performance Health System. Prior to joining the Fund, she was a research associate at a management consulting firm serving the pharmaceutical and biotechnology industries. She holds a bachelor of science degree from Cornell University in biology, and is currently a candidate for a master of public administration degree in health policy and management from New York University’s Wagner Graduate School of Public Service. Alyssa L. Holmgren, program assistant for The Commonwealth Fund’s Health Care Coverage and Access Program and the State Innovations Program, provides research, statistical, and graphical support for the preparation of Fund publications. Prior to joining the Fund, she worked with AmeriCorps in Puerto Rico as the coordinator of an economic empowerment program for high school girls. She holds bachelors degrees in economics and Spanish from the University of Georgia and is currently a candidate for a master of public administration degree in public sector and nonprofit management and policy from New York University’s Wagner Graduate School of Public Service. ACKNOWEDGMENT The authors thank Barbara Cooper and Marilyn Moon for their helpful comments. vii EXECUTIVE SUMMARY Annual growth in U.S. health care costs is outstripping yearly increases in workers’ wages by a substantial margin. Employers are coping with rising costs by sharing more of their expenses with their employees or dropping coverage altogether. The combination of rising out-of-pocket health costs and sluggish wage growth threatens workers’ ability to save for retirement. This is particularly true for those over age 50, whose per-capita health care expenditures are more than twice that of workers in their 20s. In addition, the continuing erosion of retiree health coverage in companies across the country means that health costs could claim an increasingly large share of older adults’ savings after retirement. The Commonwealth Fund Survey of Older Adults, conducted from September to November of 2004, presents new information on the health and financial security of adults ages 50 to 70. The survey finds widespread support among older adults for policies that would help them save for their future health and long-term care costs that are not covered by Medicare. It also finds broad support for policies that would allow them to buy into Medicare before age 65. Support for these options likely reflects the high rate of chronic health problems in this age group and the fact that many older adults are exposed to high medical costs. Older adults too young to qualify for Medicare who are uninsured or have coverage on the individual market are particularly at risk of high out-of-pocket costs. Majorities of older adults with Medicare say that becoming eligible for Medicare was very important. Compared with those with other forms of coverage, Medicare beneficiaries say they have an equal or greater choice of doctors, fill out less paperwork, have fewer problems getting their insurance to pay their doctors, and are equally or more satisfied with the quality of their health care and confident in their ability to receive the best medical care available when needed. However, the survey also finds evidence of financial vulnerability among Medicare beneficiaries, stemming from Medicare’s cost-sharing requirements and lack of coverage for high-cost services such as long-term care. The following are some of the key findings of the survey: Older Adults Voice Strong Support for New Medicare Health Accounts and Early Access to Medicare • A substantial majority of respondents, 69 percent, said they would be interested in having 1 percent of their earnings deducted from their paychecks and placed into a Medicare account, which they could then use to pay for long-term care or other viii expenses that are not covered by Medicare. There was broad-based, majority support across income, region of the country, health status, and political affiliation. Interest was highest among adults in their early 50s (Figure ES-1).1 Figure ES-1 Majorities of Adults Across Political Affiliation Express Interest in Medicare Health Accounts* Percent of adults ages 50–70 in working families interested in a Medicare Health Account 100 69 68 71 71 75 50 25 0 Total Democrat Republican Independent * Respondents were asked: “Thinking about paying for your healthcare in the future, would you be interested in having 1% of your (and/or your spouses’) earnings deducted from your paycheck(s), tax-free, and placed in your own Medicare account(s) to use for long-term care or other expenses not covered by Medicare?” Source: The Commonwealth Fund Survey of Older Adults (2004). • Nearly three-fourths (73%) of adults ages 50 to 64 said they would be very or somewhat interested in receiving Medicare before age 65. Majorities of older adults across the income spectrum expressed support for this option (Figure ES-2). A majority would be willing to pay at least a small premium to participate but the benefit would likely have to be subsidized to facilitate participation. ix Figure ES-2 Percent of Adults Ages 50–64 Who Are Very/Somewhat Interested in Receiving Medicare Before Age 65, by Insurance Status and Income Percent of adults ages 50–64 and not on Medicare Somewhat interested Very interested 100 94 84 86 81 73 24 73 75 68 22 66 26 31 32 33 50 34 36 70 64 58 50 25 41 34 40 30 0 Total Employer Individual Uninsured Less $25,000– $40,000– $60,000 than $39,999 $59,999 or more $25,000 Source: The Commonwealth Fund Survey of Older Adults (2004). Medicare Beneficiaries Are Interested in Consolidating Their Coverage • Half of Medicare beneficiaries (50%) said they would be very or somewhat interested in paying an extra $100 per month to have all their health services, including prescription drugs, covered under one plan. Limited Support for Elite Networks and Medical Homes • Half of adults (50%) ages 50 to 70 expressed interest in participating in an arrangement in which Medicare or their insurance plan charged them a lower monthly premium if they agreed to go to doctors that provided the best care at the lowest cost, even if it meant they had to change their doctors. Only a third (34%) of those 65 to 70 expressed interest. • Just over one-third (36%) of all respondents agreed that Medicare or their insurance plan should require them to sign up for a doctor that would be their regular source of care. Those ages 65 and older were the most opposed to the idea: less than a quarter (24%) agreed that Medicare should require them to have a regular doctor. Older Adults with Individual Coverage Have High Out-of-Pocket Costs • More than two of five (42%) older adults with individual coverage have deductibles higher than $1,000. Nearly a quarter (24%) must meet annual deductibles of $2,000 or x more. Just 2 percent of Medicare beneficiaries and 7 percent of older adults with employer-based coverage face deductibles of greater than $1,000 a year. • More than half (54%) of older adults with coverage on the individual market spend $3,600 or more annually on their health insurance premiums and a quarter (26%) spend $6,000 or more. In contrast, only 17 percent of older adults with employer coverage and 6 percent of those with Medicare spend $3,600 or more annually. • Using a measure of “underinsurance” based on whether people have high out-of- pocket costs (excluding premiums) and deductibles relative to their income, 32 percent of older adults with coverage purchased in the individual market were underinsured. This was a much higher rate than that of older adults with employer coverage (5%) or Medicare (17%). Exposure to Health Care Costs Creates Access and Medical Bill Problems • Nearly a quarter (24%) of older adults reported that they had failed to get health care services because of cost, including not filling a prescription, not seeing a doctor or specialist when needed, or skipping a medical test or follow-up treatment. Fifty-seven percent of uninsured older adults and nearly a third (32%) of those with individual coverage reported at least one such access problem (Figure ES-3). Figure ES-3 Access Problems Because of Cost Percent of adults who had any of four access problems* in past year because of cost 75 57 50 32 24 23 21 18 25 0 Total, Ages Total Medicare Employer Individual Uninsured 50–70 Insured * Did not fill a prescription; did not see a specialist when needed; skipped medical test, treatment, or follow-up; did not see doctor when sick. Source: The Commonwealth Fund Survey of Older Adults (2004). xi • More than one-third (35%) of older adults either had a problem paying their medical bills in the last 12 months or were paying off medical debt they had accrued over the last three years. Medical bill problems included having difficulty or not being able to pay bills, being contacted by a collection agency concerning outstanding bills, or making significant life changes in order to pay bills. Those who were uninsured, purchased coverage on the individual market, or had Medicare had the highest rates of problems (Figure ES-4). Figure ES-4 More than One-Third of Older Adults Report Medical Bill Problems Percent of adults ages 50–70 with any medical bill problems or outstanding medical debt* 75 54 50 39 35 33 35 30 25 0 Total, Ages Total Medicare Employer Individual Uninsured 50–70 Insured * Problems paying/not able to pay medical bills, contacted by a collection agency for medical bills, had to change way of life to pay bills, or has medical debt being paid off over time. Source: The Commonwealth Fund Survey of Older Adults (2004). The Importance of Becoming Covered by Medicare • One-quarter (24%) of Medicare beneficiaries reported that they were uninsured just before they entered Medicare. Among adults 50 to 64 who are eligible for Medicare because of a disability, more than two of five (41%) said they were uninsured just before becoming beneficiaries. • A substantial majority (71%) of Medicare beneficiaries ages 50 to 70 said that becoming eligible for Medicare was very important. Those who were disabled or lived in low-income households perceived Medicare eligibility to be particularly essential. • Older adults with Medicare rate their overall health insurance coverage as high as those with employer-based coverage and much higher than those with coverage purchased through the individual market. xii • Among Medicare beneficiaries who were insured before becoming eligible for the program, about three of five (59%) said that their overall insurance was about the same as it had been before; one of five (23%) reported that their coverage was better. Three-quarters (75%) said that their choice of doctors was unchanged. More than half (55%) reported that they spent about the same amount of time on paperwork and 30 percent said that they spent less time on paperwork. • Medicare beneficiaries and older adults with employer coverage are the most satisfied with the quality of the health care they receive and express the most confidence in getting the best medical care available when they need it. Majorities of Older Adults Are Concerned About Their Future Health and Financial Security • Nearly half (48%) of adults ages 50 to 70 have retirement savings of less than $50,000 and nearly two of five (38%) have savings of less than $25,000. Lower-income adults have the most limited savings. Among adults ages 50 to 70 with household incomes under 200 percent of poverty, 80 percent had accumulated savings of less than $25,000. • Nearly two of five (39%) adults ages 50 to 70 said they were not too confident or not at all confident they would have enough income and savings to live comfortably in retirement. • More than three of five (63%) adults ages 50 to 70 said they were very or somewhat worried they might not be able to afford needed medical care in the future. Seventy- one percent said they were very or somewhat worried that they would not be able to afford health insurance. Conclusion Older adults without adequate health coverage are at risk of suffering adverse health events from skipping needed care. They are also at risk of spending large shares of their income on out-of-pocket costs and accumulating medical debt. Poor health can erode older adults’ ability to participate in daily activities and accumulate income prior to retirement. Moreover, if older adults postpone or do not receive essential care for chronic health conditions such as diabetes, arthritis, or high blood pressure, they are at risk of entering the Medicare program in deteriorating health and with much more costly medical conditions. xiii Yet, older adults are becoming less rather than better protected. According to the most recent U.S. Census data, the number of uninsured adults ages 50 to 64 climbed from 5.5 million in 2000 to 6.4 million in 2003. In addition, the percentage of large firms offering retiree health benefits dropped from 66 percent in 1988 to 36 percent in 2004. Many companies that still offer benefits are making them less generous. Hewitt Associates estimates that medical costs can add up to an estimated 20 percent of pre-retirement income for workers who retire at age 65 without employer health care benefits. Early retirees without employer coverage can expect to spend an estimated 40 percent of pre- retirement income on their medical expenses. While the new Medicare prescription drug benefit will offset some of those costs for beneficiaries, older adults without retiree health benefits will continue to see a portion of their retirement income go toward health care costs. Several targeted investments could improve the health and financial security of older adults. The survey shows strong interest among older adults in opening a Medicare health account to set aside income for long-term care and other health care expenses that are not covered by Medicare. In addition, a large majority of adults ages 50 to 64 is interested in participating in the Medicare program before the age of 65. To facilitate participation, subsidies or tax credits for a buy-in could be linked to income such that those with household incomes of less than 200 percent of poverty would pay no more than 5 percent of their incomes and those with higher incomes would pay no more than 10 percent. Finally, eliminating the two-year waiting period for the disabled in the Medicare program would directly address the financial hardship of that population so clearly evident in this survey. Cutting back on the health care of older adults through the erosion of employee and retiree health benefits will serve only to worsen the health and financial status of older adults and magnify the financing issues currently looming before Medicare. Instead, targeted investments in their health care would likely make strides toward a more robust economy and a sustainable Medicare program. xiv WILL YOU STILL NEED ME? THE HEALTH AND FINANCIAL SECURITY OF OLDER AMERICANS INTRODUCTION Annual growth in U.S. health care costs is outstripping yearly increases in workers’ wages by a substantial margin. In 2004, employer health insurance premiums jumped by 11 percent—their fourth year of double-digit inflation—while average wages climbed by less than 3 percent.2 Employers are responding to rising premiums by shifting more of their costs to employees in the form of greater premium contributions, higher deductibles, larger copayments, and/or slower wage increases.3 Some employers, particularly small firms, are dropping coverage altogether. The combination of rising out-of-pocket health care costs and sluggish wage growth threatens workers’ ability to save for retirement. This is particularly true for older workers, ages 50 to 64, whose per-capita health care expenditures are more than twice that of younger workers. In addition, the continuing erosion of retiree health coverage in companies across the country means that health costs could claim an increasingly large share of older adults’ savings after retirement.4 The Commonwealth Fund Survey of Older Adults finds widespread support among older adults for policies that would help them save for their future health and long- term care costs. It also finds broad support for policies that would allow them to buy into Medicare before age 65. The survey was conducted by International Communications Research from September 14 through November 21, 2004. The survey consisted of 25- minute telephone interviews in either English or Spanish and was conducted among a random, nationally representative sample of 2,007 adults ages 50 to 70 living in the continental United Sates. The study included 1,591 adults ages 50 to 64 and 416 adults ages 65 to 70. Statistical results are weighted to make the results representative of all adults ages 50 to 70 in the continental United States. The Appendix includes a complete explanation of the survey methodology. THE EXTENT AND QUALITY OF INSURANCE COVERAGE AMONG OLDER ADULTS: HOW WELL ARE THEY PROTECTED? The purpose of health insurance coverage is to provide affordable access to care and to protect against the catastrophic costs of accidents and illness. Among older adults, chronic health problems and other medical needs associated with advancing age make access to care and protection against high costs particularly important. Poor health can erode older adults’ ability to participate in daily activities and accumulate income prior to retirement. 1 Moreover, if adults in these vulnerable years postpone or do not receive essential care for chronic health conditions such as diabetes, arthritis, or high blood pressure, they are at risk of entering the Medicare program in deteriorating health and with much more costly conditions.5 Older Adults Have High Rates of Chronic Health Conditions The incidence of chronic conditions increases dramatically with age, placing older adults at greater risk of incurring high medical costs than younger adults.6 Indeed, per capita health care expenditures among adults ages 50 to 64 are more than twice those of adults in their twenties.7 The survey asked respondents whether a doctor had told them that they had any of six chronic conditions: hypertension or high blood pressure, heart disease or heart attack, cancer, diabetes, arthritis, or high cholesterol. Seventy percent of those 50 to 70 reported that they had at least one of these six conditions (Figure 1). High blood pressure, arthritis, and high cholesterol were the most common problems, with more than one-third of respondents citing any one. The rate of reported health problems increases dramatically with age, rising from 67 percent among those ages 50 to 64 to 84 percent in the 65-to-70 age group.8 Chronic conditions are most common among older adults in low-income families. In households with incomes under 200 percent of poverty, three-quarters of those 50 to 64 and 93 percent of those 65 to 70 reported at least one chronic health problem. Figure 1 Older Adults Have High Rates of Chronic Conditions* Total <200% poverty 200% poverty or more Percent of adults with a chronic condition* 100 93 84 80 81 70 67 75 75 67 64 50 25 0 Ages 50–70 Ages 50–64 Ages 65–70 * Includes hypertension/high blood pressure, heart disease/heart attack, cancer, diabetes, arthritis, or high cholesterol. Source: The Commonwealth Fund Survey of Older Adults (2004). 2 The survey also asked people to describe their health status and whether they had a disability that prevented them from fully participating in work or other daily activities such as housework. More than one of five (22%) older adults described their health as either fair or poor and 23 percent had a limiting disability (Tables 1, 2). Reports of fair or poor health status were dramatically higher among those in low-income households: 46 percent of adults 50 to 64 in households with income under 200 percent of poverty reported that their health was fair or poor compared with 14 percent of those in higher- income households (Table 2). Likewise, older adults in low-income households were far more likely to report a limiting disability. Nearly half (48%) of adults 50 to 64 with income under 200 percent of poverty reported a disability, nearly three times that the rate of adults ages 50 to 64 with higher incomes (Table 2). Many Older Adults Have Unstable Health Insurance Coverage Despite these high rates of chronic conditions, the survey found that 12 million older adults were uninsured or had histories of unstable coverage. Among adults ages 50 to 64, approximately 10 percent, representing 5 million people nationwide, were uninsured at the time of the survey (Figure 2, Table 3). An additional 7 percent, or 3 million, had coverage at the time of the survey but had experienced a period without insurance in the past year. An additional 8 percent of respondents, or 4 million, had been covered in the last year but spent some time without coverage since turning 50. Figure 2 Insurance Instability Among Adults Ages 50–64 Is Highest Among Those with Low Incomes Percent of adults ages 50–64 Insured all last year, time uninsured since age 50 75 Insured now, time uninsured in past year Uninsured now 51 50 14 31 25 14 25 12 18 8 7 7 6 23 6 12 7 2 10 5 1 3 0 Total Less than $25,000– $40,000– $60,000 $25,000 39,999 $59,999 or more Note: Income groups based on 2003 household income. Source: The Commonwealth Fund Survey of Older Adults (2004). People with low incomes report particularly high rates of unstable coverage. More than half (51%) of adults 50 to 64 with incomes less than $25,000 were uninsured when 3 surveyed, had a time without coverage in the past year, or were without coverage at some point since turning 50 (Figure 2). By contrast, just 6 percent of older adults earning more than $60,000 reported a time without coverage. Older Adults with Individual Coverage Pay More for Less Comprehensive Coverage Like the rest of the population, older adults spend different sums of money each year on their health care, depending on whether they have insurance coverage, what type of coverage they have, and how healthy they are. Annual out-of-pocket costs are generally affected by insurance premium costs, the size of deductibles, copayments and coinsurance, and health care service use. Premiums vary widely depending on whether coverage is through an employer, Medicare, or the individual market. Premiums also vary significantly across employers and by services included, such as prescription drugs. The size of deductibles—health care costs paid by individuals out of pocket before coverage begins— also depends on the source of coverage. Finally, nearly everyone pays a share of the cost when they receive care or purchase prescription drugs in the form of a copayment or coinsurance. Those without coverage may pay the full charge for prescriptions or services. About 7 percent of adults ages 50 to 64 purchase coverage on the individual market (Table 3). As a group, they have higher incomes and are in better health than average for this age range, with the difference particularly pronounced when compared with older adults with Medicare, who have much lower incomes and are in much worse health (Table 1). This is especially true of adults who become eligible for Medicare before age 65 due to a permanent disability. Three of five (62%) disabled Medicare beneficiaries ages 50 to 64 were in households with incomes below 200 percent of poverty, compared with about one-third of Medicare beneficiaries 65 and older (data not shown). Higher premiums. In most states, underwriting practices in the individual market take into account age and health status. Because age places older adults in a higher risk category for chronic health problems and catastrophic illness, they face much higher premiums for individual coverage than their counterparts with Medicare or employer coverage. More than half (54%) of older adults with coverage on the individual market spend $300 or more per month, or $3,600 or more annually, on premiums and a quarter (26%) spend $500 or more a month, or $6,000 or more annually (Figure 3). In contrast, only 17 percent of older adults with employer coverage and 6 percent of those with Medicare spend in excess of $3,600 per year on premiums. 4 Figure 3 More than Half of Older Adults with Individual Coverage Spend $3,600 or More Annually on Premiums Percent of insured adults ages 50–70 75 Annual premium $6,000 or more Annual premium $3,600–$5,999 54 50 26 25 16 17 6 6 6 28 10 2 11 0 4 Total Insured Medicare Employer Individual Source: The Commonwealth Fund Survey of Older Adults (2004). Despite the fact that older adults with individual coverage have higher-than- average incomes, nearly three of five (57%) spend 5 percent or more of their income on health insurance premiums and a third (33%) spend 10 percent or more (Table 4). In contrast, among older adults with employer-based coverage, just 21 percent spend 5 percent or more of their incomes on premiums and only 8 percent spend 10 percent or more. Medicare beneficiaries of all ages spend nearly the same share of their incomes on premiums as those with employer-based coverage. Not surprisingly, older adults with individual coverage report difficulty paying their premiums. More than three of five (62%) said that it was very or somewhat difficult to afford their premiums. Yet, many older adults with employer coverage or Medicare also feel financially burdened by their premiums. More than one-third (37%) of Medicare beneficiaries and 27 percent of older adults with employer coverage said they found it very or somewhat difficult to afford their premiums (Table 4). Higher deductibles. Even though they pay far more in premiums, older adults with individual coverage face much higher deductibles than those with employer coverage or Medicare. More than two of five (42%) older adults with individual coverage have deductibles of $1,000 or higher (Figure 4). In fact, nearly a quarter (24%) of older adults with individual coverage must meet annual deductibles of $2,000 or more per year (Table 4). Just 2 percent of Medicare beneficiaries and 7 percent of older adults with employer coverage face deductibles of $1,000 or more per year (Figure 4). 5 Figure 4 More than Two of Five Older Adults with Individual Coverage Have Annual Deductibles of $1,000 or More Percent of insured adults ages 50–70 75 Annual deductible $1,000 or more Annual deductible $500–$999 54 50 42 25 18 19 8 9 7 2 12 12 10 7 0 Total insured Medicare Employer Individual Source: The Commonwealth Fund Survey of Older Adults (2004). Less prescription drug coverage. Older adults with individual insurance are also much less likely to have coverage for drugs than those with employer coverage. Nearly 30 percent of older adults with individual insurance lack prescription drug coverage compared with 5 percent of those with employer coverage (Table 5). One-third of Medicare beneficiaries lack drug coverage. The new Medicare drug benefit that takes effect in 2006 will help to fill this gap. Higher out-of-pocket costs. The out-of-pocket costs among older adults with individual coverage, excluding premiums, are similar in magnitude to those among uninsured older adults. The survey found that 36 percent of uninsured older adults and 35 percent of older adults with coverage through the individual market spent $1,000 or more per year on out-of-pocket health care costs, including prescription drugs. About 20 percent of those with employer-based coverage or Medicare spent this much (Figure 5). Three of 10 (29%) older adults who were uninsured at the time of the survey spent 5 percent or more of their income on out-of-pocket medical costs and a quarter (24%) spent 10 percent or more (Table 5). More than a quarter (26%) of older adults with individual coverage spent 5 percent or more of their income on out-of-pocket costs. 6 Figure 5 Annual Out-of-Pocket Medical Expenses, Including Prescription Drugs* Percent of insured adults ages 50–70 75 Annual out-of-pocket expenses $5,000 or more Annual out-of-pocket expenses $1,000–$4,999 50 35 36 22 22 8 10 25 20 3 3 2 27 26 19 17 20 0 Total Medicare Employer Individual Uninsured insured * Does not include premiums. Source: The Commonwealth Fund Survey of Older Adults (2004). High premiums, high deductibles, and high out-of-pocket costs add up to substantial expenditures for older adults with individual coverage. In the survey, half of older adults with individual coverage spent $5,500 or more per year on the costs of insurance premiums and their health care compared with 16 percent of those with employer coverage and 8 percent of Medicare beneficiaries (Table 5). As a share of their income, nearly two-thirds (64%) of older adults with individual coverage spent 5 percent or more of their income on premiums and health care costs and two of five spent 10 percent or more. Higher rates of underinsurance. Cathy Schoen and colleagues at The Commonwealth Fund developed a measure of “underinsurance” based on whether people have high out- of-pocket costs and high deductibles relative to their incomes.9 They defined people as underinsured if: 1) their medical expenses (excluding premiums) amounted to 10 percent or more of income; 2) their medical expenses (excluding premiums) were 5 percent or more of income and they were in households with incomes of less than 200 percent of poverty; or 3) their health plan deductibles were 5 percent or more of their income. When this measure is applied to insured older adults in the survey, nearly one-third (32%) with coverage on the individual market were underinsured compared with 17 percent of Medicare beneficiaries and just 5 percent of those with employer coverage (Figure 6). 7 Figure 6 Percent of Insured Older Adults Who Are “Underinsured”* Percent of insured adults 50–70 50 32 25 17 10 5 0 Total Insured Medicare Employer Individual * Defined as “underinsured” if: 1) medical expenses (excluding premiums) represent 10% or more of income; 2) medical expenses (excluding premiums) for low income (<200% FPL) represent 5% or more of income; or 3) deductible represents 5% or more of income. Based on C. Schoen et al., “Insured But Not Protected: How Many Adults Are Underinsured?” Health Affairs Web Exclusive (June 14, 2005): W5-289–W5-302. Source: The Commonwealth Fund Survey of Older Adults (2004). Older Adults Who Are Uninsured or Have Individual Coverage Have Reduced Access to Care High out-of-pocket costs appear to interfere with older adults’ access to the health care system. The survey asked respondents whether in the last 12 months they had failed to seek medical care because of cost. In particular, respondents were asked if they had not filled a prescription; skipped a medical test, treatment, or follow-up visit recommended by a doctor; had a medical problem but did not go to a doctor or clinic; or did not see a specialist when a doctor or the respondent thought it was needed. Nearly a quarter (24%) of older adults reported at least one cost-related access problem (Figure 7). Those who are on average most exposed to the costs of health care— the uninsured or those with individual coverage—were most likely to report not accessing care because of cost. Fifty-seven percent of uninsured older adults and nearly a third (32%) of older adults with individual coverage reported at least one access problem. In contrast, 23 percent of Medicare beneficiaries and 18 percent of older adults with employer coverage reported not accessing care due to cost.10 8 Figure 7 Access Problems Because of Cost Percent of adults who had any of four access problems* in past year because of cost 75 57 50 32 24 23 21 18 25 0 Total, Ages Total Medicare Employer Individual Uninsured 50–70 Insured * Did not fill a prescription; did not see a specialist when needed; skipped medical test, treatment, or follow-up; did not see doctor when sick. Source: The Commonwealth Fund Survey of Older Adults (2004). Among Medicare beneficiaries, failing to fill a prescription was by far the most frequently reported cost-related access problem (Table 6). Approximately one-third (32%) of beneficiaries lacked any form of prescription drug coverage even though more than four of five (84%) took prescription drugs on a regular basis (Table 5). High deductibles are a particularly prominent barrier to obtaining health care. Thirty-five percent of older adults with annual deductibles of $1,000 or more reported at least one cost-related access problem (Figure 8). Among insured adults with no annual deductibles or deductibles of less than $1,000, about one of five said that they had experienced an access problem.11 9 Figure 8 Access Problems in Past Year, by Size of Deductible Percent who had any of four access problems* in past year because of costs 75 50 35 21 21 22 25 18 0 Total None $1–$499 $500–$999 $1,000 or more * Did not fill a prescription; did not see a specialist when needed; skipped medical test, treatment, or follow-up; did not see doctor when sick. Source: The Commonwealth Fund Survey of Older Adults (2004). Older Adults Report High Rates of Medical Bill Problems The survey asked older adults about their ability to pay their medical bills in the last 12 months, including whether there were times when they had difficulty or were unable to pay their bills, whether they had been contacted by a collection agency concerning outstanding medical bills, or whether they had to change their life significantly in order to pay their bills. People who reported no medical bill problems in the last 12 months were asked if they were currently paying off medical debt that they had incurred in the last three years. More than one-third (35%) of older adults either had a medical bill problem in the last 12 months or were paying off accrued medical debt (Figure 9, Table 6). The problem was most severe among uninsured older adults: more than half (54%) reported difficulty paying medical bills or said they had accrued medical debt. Rates were also high among older adults with individual coverage: nearly two of five (39%) reported struggling to pay medical bills or having medical debt.12 10 Figure 9 More than One-Third of Older Adults Report Medical Bill Problems Percent of adults ages 50–70 with any medical bill problems or outstanding medical debt* 75 54 50 39 35 33 35 30 25 0 Total, Ages Total Medicare Employer Individual Uninsured 50–70 insured * Problems paying/not able to pay medical bills, contacted by a collection agency for medical bills, had to change way of life to pay bills, or has medical debt being paid off over time. Source: The Commonwealth Fund Survey of Older Adults (2004). More than one-third (35%) of Medicare beneficiaries cited at least one medical bill problem or accrued debt. Medicare does not cover some services, including high-cost services such as long-term and home health care. At the time of the survey, the program did not cover prescription drugs. In addition, Medicare beneficiaries are financially vulnerable because they have lower incomes than other older adults (Table 1). Thus, though Medicare beneficiaries’ out-of-pocket costs may be similar to those with employer coverage, as a share of income their burden is higher (Table 5). Disabled Medicare beneficiaries under age 65 are particularly vulnerable to medical bill problems since they are poorer, use more services, and are more likely than Medicare beneficiaries 65 and older to have been uninsured in the years prior to becoming eligible for Medicare. Fifty-seven percent of disabled beneficiaries reported a payment problem or accrued debt compared with 27 percent of beneficiaries 65 and older (data not shown). There were stark differences between reported rates of medical bill problems and debt among lower- and higher-income older adults. Nearly three of five (57%) adults ages 50 to 70 in households under 200 percent of poverty reported bill problems or debt— double the rate of those in households with incomes of 200 percent of poverty or more (Table 7). 11 Having a high-deductible health plan is also associated with higher rates of medical bill and debt problems. Among insured adults, nearly half (47%) of those with annual deductibles of $1,000 or more reported medical bill problems or accrued debt (Figure 10). In contrast, about one-third (34%) of older adults with annual deductibles of between $1 and $499 per year and fewer than three of 10 (28%) with no deductibles said they had experienced a medical bill or debt problem.13 Figure 10 Medical Bill or Debt Problems in Past Year, by Size of Deductible Percent of insured adults ages 50–70 with any medical bill problem or outstanding debt* 75 47 50 42 33 34 28 25 0 Total None $1–$499 $500–$999 $1,000 or more * Problems paying/not able to pay medical bills, contacted by a collection agency for medical bills, had to change way of life to pay bills, or has medical debt being paid off over time. Source: The Commonwealth Fund Survey of Older Adults (2004). THE IMPORTANCE OF GAINING MEDICARE COVERAGE: VIEWS OF OLDER ADULTS The survey explored Medicare beneficiaries’ views of their insurance coverage. In particular, the survey asked participants about the importance of becoming eligible for Medicare, their experiences with the program, and the degree to which they would trust Medicare to provide coverage to older adults ages 50 to 65. Many Disabled and Low-Income Older Adults Are Uninsured Prior to Becoming Eligible for Medicare Many older adults lack insurance coverage just before becoming eligible for Medicare. Roughly one-quarter (24%) of Medicare beneficiaries reported that they were uninsured before they entered Medicare (Figure 11, Table 8). This is a particular problem among people whose disability prevents them from working but who must wait two years before becoming eligible for Medicare.14 Among adults ages 50 to 64 who are eligible for 12 Medicare because of a disability, more than two of five (41%) said that they were uninsured just before becoming eligible. In addition, a high rate of Medicare beneficiaries with low incomes reported being uninsured prior to Medicare—38 percent of those with incomes under 200 percent of poverty were uninsured. Figure 11 Percent of Medicare Beneficiaries Who Were Uninsured Just Before Medicare Percent of Medicare beneficiaries ages 50–70 75 50 41 38 24 25 18 11 0 All on Ages 65–70 Ages 50–64, Less than 200% poverty Medicare disabled 200% poverty or more Source: The Commonwealth Fund Survey of Older Adults (2004). Medicare Beneficiaries View Becoming Covered by Medicare as Very Important A substantial majority (71%) of Medicare beneficiaries ages 50 to 70 said that becoming eligible for Medicare was very important (Figure 12). Those who were disabled or lived in low-income households perceived Medicare eligibility as particularly essential. More than four of five (84%) disabled Medicare beneficiaries ages 50 to 64 viewed eligibility as critical, as did 85 percent of beneficiaries ages 50 to 70 in households with incomes under 200 percent of poverty. Yet, even among higher-income families, a majority or respondents regarded Medicare eligibility as very important: 58 percent of those with household incomes of 200 percent of poverty or more said that becoming eligible for Medicare was very important. 13 Figure 12 Importance of Becoming Eligible for Medicare Percent of Medicare beneficiaries ages 50–70 who said it was “very important” to become eligible for Medicare 100 84 85 71 75 66 58 50 25 0 All on Age 65–70 Age 50–64, Less than 200% poverty Medicare disabled 200% poverty or more Source: The Commonwealth Fund Survey of Older Adults (2004). The survey asked respondents to rate all of their current health insurance coverage, which in the case of Medicare beneficiaries might also include retiree health benefits, supplemental insurance, or Medicaid. More than half of adults ages 50 to 70 with Medicare (55%) or employer-sponsored coverage (57%) said that their coverage was excellent or very good (Figure 13). In contrast, only one-third (32%) of respondents who had purchased coverage on the individual market rated their insurance as excellent or very good. Figure 13 Ratings of Insurance Coverage Percent of adults rating insurance coverage “excellent” or “very good” 75 Very Good Excellent 55 55 57 50 32 28 35 32 25 20 23 27 22 12 0 All insured, Medicare Employer Individual ages 50–70 Source: The Commonwealth Fund Survey of Older Adults (2004). 14 When asked specifically about the Medicare program, somewhat fewer beneficiaries rated the program as excellent or very good. About 37 percent said the Medicare program was excellent or very good (Table 8). This sentiment may reflect Medicare’s high cost-sharing and lack of coverage for certain services, including, at the time of the survey, prescription drugs. Medicare beneficiaries were asked how their overall coverage compared with coverage they had before becoming eligible for the program. About three of five (59%) beneficiaries who had insurance coverage prior to Medicare said that their overall insurance was about the same as it had been before and one of five (23%) reported that their coverage was better (Table 8). A large majority (75%) said that their choice of doctors was essentially unchanged when they joined Medicare. The survey also asked all older adults about their choice of doctors, insurance- related paperwork, and whether they had difficulty getting insurers to pay physicians. More than half (52%) of Medicare beneficiaries said they had a great deal of choice in where they go for care, about the same rate as older adults with employer-based or individual coverage (Table 9). Less than 30 percent of older adults with Medicare reported filling out paperwork in the last year compared with 39 percent of those with employer coverage and 44 percent of those with individual coverage (Table 9). When asked about the amount of time they had to spend on insurance-related paperwork, more than half (55%) reported that they spent about the same amount of time as they did before Medicare and 30 percent said that they spent less time (Table 8). Fewer older adults with Medicare reported problems getting their insurance to pay their doctors than those with employer or individual coverage (Table 9). Older adults with Medicare report fewer problems with their insurance than those with individual coverage. The survey asked respondents whether their doctors had ever charged them a lot more than their plans would pay and if they had paid the higher fee, whether they had ever been told that a doctor was not accepting their insurance plan, or whether they had reached the limit of what their plans would pay for treatment of a specific illness or injury. Just over one-third (34%) of Medicare enrollees and 38 percent of older adults with employer plans reported any one of these problems compared with 46 percent of those with individual coverage (Table 9).15 Older Adults with Medicare or Employer Coverage Are Most Satisfied with the Quality of Their Health Care and Confident in their Ability to Get the Best Care Medicare beneficiaries and older adults with employer coverage are the most satisfied with the quality of their health care. About three of five older adults with Medicare (60%) or 15 employer coverage (58%) said they were very satisfied with the quality of care they had received in the last 12 months (Figure 14, Table 10). In contrast, only two of five (41%) older adults with individual coverage said they were very satisfied with their care. Uninsured older adults reported the least satisfaction with the quality of their care: less than a quarter (23%) said they were very satisfied. Figure 14 Medicare Beneficiaries and Older Adults with Employer Coverage Are Most Satisfied with Health Care Quality Percent who said they were “very satisfied” with their health care 75 60 58 57 54 50 41 23 25 0 Total, Ages Total Medicare Employer Individual Uninsured 50–70 insured Source: The Commonwealth Fund Survey of Older Adults (2004). Older adults with Medicare or employer coverage also expressed the most confidence that they could obtain the best medical care available when needed. More than half of those with Medicare (56%) and employer coverage (52%) said they were very confident they could get the best available care compared with 45 percent of those with individual coverage (Figure 15).16 Uninsured older adults expressed the least confidence in their ability to obtain the best care: only 18 percent said they were very confident. 16 Figure 15 Medicare Beneficiaries and Older Adults with Employer-Sponsored Coverage Are Most Confident in Getting the Best Medical Care Percent reporting they were “very confident” in getting the best medical care 75 56 49 52 52 50 45 25 18 0 Total, Ages Total Medicare Employer Individual Uninsured 50–70 insured Source: The Commonwealth Fund Survey of Older Adults (2004). The survey asked the full sample of older adults ages 50 to 70 which source of insurance they would trust more to provide health insurance to older adults under age 65: the Medicare program, employers, or the private individual market. Thirty-eight percent of respondents said they would trust Medicare, while 28 percent would trust employers, and 24 percent would trust the individual market (Table 11). Uninsured older adults, those with low incomes, and minorities were by far the most trusting of Medicare, with 50 percent or more selecting the program over other sources. Respondents tended to trust their own coverage the most: Medicare enrollees most often chose the Medicare program (45%) and older adults with employer coverage most often chose employers. Those with coverage on the individual market split about evenly between trusting the individual market (41%) and Medicare (39%). OLDER AMERICANS ARE CONCERNED ABOUT THEIR FINANCIAL AND HEALTH SECURITY The survey questioned older Americans about their confidence in their retirement income and in the stability and affordability of their health insurance and health care. It explored the extent to which older adults have or expect to have retiree health coverage and the importance of coverage in their decision to retire. 17 Older Adults Are Worried They Lack Sufficient Savings and Income for Retirement Respondents were asked how confident they were that they would have sufficient income and accumulated savings to live comfortably in retirement. Nearly two of five (39%) older adults ages 50 to 70 said they were not too confident or not at all confident they would have enough money for their retirement (Figure 16, Table 12). The generation aging into retirement was less confident than older adults already eligible for Social Security and Medicare: two of five (41%) of those ages 50 to 64 were not too/not at all confident compared with 29 percent of those 65 or older. Those with low incomes held the bleakest outlook. Among adults 50 to 70 with incomes under 200 percent of poverty, 64 percent said they were not too or not at all confident that they would have sufficient savings and income in retirement. Figure 16 Two of Five Older Adults Are Not Confident in Their Retirement Security: Older Adults with Low Incomes Are the Least Confident Percent of adults who are not too or not at all confident they’ll have enough income and savings to live comfortably in retirement Total <200% poverty 200% poverty or more 100 75 69 64 50 50 39 41 30 32 29 25 15 0 Ages 50–70 Ages 50–64 Ages 65–70 Source: The Commonwealth Fund Survey of Older Adults (2004). Older adults’ lack of confidence in their retirement savings is not without basis. The survey asked respondents how much money they had saved for retirement, including savings accounts and stock holdings but excluding their homes. Nearly half (48%) of adults ages 50 to 70 have retirement savings of less than $50,000 and nearly two of five (38%) have savings of less than $25,000 (Figure 17, Table 12). Lower-income adults had the most limited savings. Among older adults ages 50 to 70 with household incomes under 200 percent of poverty, 80 percent had accumulated savings of less than $25,000 (Figure 18). Yet, even higher-income families struggle to save: a quarter (26%) of adults ages 50 to 70 with incomes of 200 percent or more of poverty had savings of less than $25,000. 18 Figure 17 Total Bank or Stock Market Savings Percent of adults ages 50–70 with savings of the following amounts Don’t know/Refused 16% Less than $25,000 38% $100,000 or more 25% $25,000–$49,999 $50,000–$99,999 10% 11% Source: The Commonwealth Fund Survey of Older Adults (2004). Figure 18 Total Bank or Stock Market Savings, by Income, Adults Ages 50–70 Don’t know/ Refused Don’t know/Refused 10% Less than Less than 7% $25,000 $25,000 80% 26% $100,000 or more 2% $50,000– $99,999 5% $25,000– $25,000– $100,000 $49,999 $49,999 or more 13% 6% 37% $50,000–$99,999 14% Less than 200% Poverty 200% Poverty or More Source: The Commonwealth Fund Survey of Older Adults (2004). Less Than Half of Older Adults Have or Expect to Have Retiree Health Insurance Retiree health benefits offered by employers have historically accorded retirees substantial protection from medical costs by providing coverage before they become eligible for Medicare and by covering services that Medicare has not covered, such as prescription 19 drugs. The survey asked retirees whether they had retiree health insurance from an employer and asked those in working families whether they expected to have benefits. Fewer than half of older adults have or expect to have retiree health benefits from their own or their spouse’s employer (Table 12). Of those older adults who are currently working or who are married to someone who is working, just 38 percent expect to have retiree health insurance. Among those already retired, 48 percent have benefits. Whether someone has retiree health benefits is strongly linked to household income. Only a quarter (24%) of retirees with incomes of less than $25,000 a year said that they had retiree benefits compared with more than two-thirds (68%) of those with incomes of $60,000 or more (data not shown). There are also signs of erosion in the quality of retiree health benefits. The survey found that nearly half (48%) of older adults who either currently have retiree health benefits or expect to have them reported increases in the amount they are required to pay out-of-pocket when they visit a doctor, fill prescriptions, or receive other medical services (Figure 19). Twenty-seven percent said that there had been actual cuts in the scope of services covered by the plan and 28 percent reported that they recently had heard of plans either to cut benefits or increase cost-sharing. Figure 19 The Quality of Retiree Health Benefits Is Eroding Percent of adults ages 50–70 with retiree health benefits or who expect to have them 75 48 50 27 28 25 0 Increases in amount Any cuts in benefits Heard of plans to paid for benefits cut benefits Source: The Commonwealth Fund Survey of Older Adults (2004). Older Adults Are Concerned They Will Not be Able to Afford Health Care Against a backdrop of eroding retiree health insurance coverage, insufficient savings, and rapidly rising health care costs, majorities of older adults express fear that they will not be 20 able to afford health care in the future. More than three of five (63%) older adults ages 50 to 70 said they were very or somewhat worried they might not be able to afford needed medical care in the future (Figure 20, Table 10). Uninsured older adults or those with individual coverage were the most concerned about being able to afford health care: 77 percent of uninsured older adults and 71 percent of those with individual coverage were very or somewhat worried. Figure 20 Majorities of Older Adults Are Worried They Won’t Be Able to Afford Needed Medical Care Percent “very/somewhat worried” about affording medical care 100 Somewhat worried Very worried 77 67 71 75 63 64 56 24 51 50 35 36 33 36 28 30 25 53 30 32 28 35 23 26 0 Total, Total, Total, Medicare Employer Individual Uninsured Ages Ages Ages 50–70 50–64 65–70 Source: The Commonwealth Fund Survey of Older Adults (2004). Older adults also are concerned they will not be able to afford the costs of insurance coverage in the future. Seventy-one percent of adults ages 50 to 70 said they were very or somewhat worried that they would not be able to afford health insurance (Table 10). Affordability concerns again were the highest among uninsured older adults and those with coverage on the individual market: 85 percent of uninsured older adults and 77 percent of those with individual coverage were very or somewhat worried about not being able to afford insurance. Health Insurance Coverage Is a Key Factor in Decision to Retire The survey found that, for both current retirees and those still working, the availability of affordable health insurance is a key factor in the decision to retire. Two-thirds (66%) of those currently working said that health insurance was going to be a very important factor in their decision to leave the workforce (Table 12). Fifty-eight percent of those who are already retired said that health insurance was a very important consideration when they made the decision to retire. 21 OLDER ADULTS SUPPORT POLICY SOLUTIONS TO IMPROVE THEIR HEALTH AND FINANCIAL SECURITY Older adults’ concerns about their health and financial security are reflected in their strong desire for public policy solutions to address them. The survey asked respondents about their interest in a set of strategies intended to improve their access to health insurance and help them save for their future health and long-term care needs. Older Adults Express Strong Support for New Medicare Accounts to Help Them Save for Long-Term Care and Other Costs Not Covered by Medicare Concerned about not having enough income and savings to live comfortably in retirement, older adults are interested in new strategies to help them save for future health care costs. The survey asked older adults in working families if they would be interested in having 1 percent of their earnings deducted from their paychecks and placed into a Medicare account. They could then use their accumulated savings in their accounts to pay for long-term care or other health services that Medicare does not cover. A substantial majority of respondents, 69 percent, said they would be interested in participating in such an automatic savings plan (Figure 21). There was broad-based, majority support across income group, region of the country, health status, and political affiliation (Table 13). Interest was higher among people in their early 50s. Figure 21 Interest in Medicare Health Accounts Is Strong Across Income Group* Percent of adults ages 50–70 in working families interested in a Medicare Health Account 100 69 69 73 72 75 67 50 25 0 Total Less than $20,000– $35,000– $60,000 or $20,000 $34,999 59,999 more * Respondents were asked: “Thinking about paying for your healthcare in the future, would you be interested in having 1% of your (and/or your spouses’) earnings deducted from your paycheck(s), tax-free, and placed in your own Medicare account(s) to use for long-term care or other expenses not covered by Medicare?” Source: The Commonwealth Fund Survey of Older Adults (2004). 22 Majorities of Older Adults Would Like to Buy into Medicare Before Age 65 Older adults are worried about their exposure to rising health care costs and access to medical services and show interest in new options for health insurance coverage. The survey asked adults ages 50 to 64 if Medicare were available to their age group how interested they would be in having Medicare coverage before their 65th birthdays. Nearly three-fourths (73%) of adults ages 50 to 64 said they would be very or somewhat interested in enrolling in Medicare before age 65 (Figure 22, Table 14). Interest was highest among people with the least protection from health care costs. Ninety-four percent of uninsured older adults were very or somewhat interested in early participation in Medicare. Eighty-four percent of those with coverage purchased on the individual market were very or somewhat interested. In addition, a large majority (68%) of older adults with employer-based insurance coverage were interested in getting into Medicare. While interest was highest among older adults earning less than $25,000 a year, a majority of those with incomes above $60,000 also were somewhat or very interested in receiving Medicare before age 65. Figure 22 Percent of Adults Ages 50–64 Who Are Very/Somewhat Interested in Receiving Medicare Before Age 65, by Insurance Status and Income Percent of adults ages 50–64 and not on Medicare Somewhat interested Very interested 100 94 84 86 81 73 24 73 75 68 22 66 26 31 32 33 50 34 36 70 64 58 50 25 41 34 40 30 0 Total Employer Individual Uninsured Less $25,000– $40,000– $60,000 than $39,999 $59,999 or more $25,000 Source: The Commonwealth Fund Survey of Older Adults (2004). A majority of older adults would be willing to pay at least a small monthly premium to join Medicare before age 65. Just over a quarter (26%) said they would be willing to pay up to $200 per month and another quarter (26%) would be willing to pay up to $100 (Figure 23). About 11 percent said they would pay no more than $50 monthly. The amount people were willing to pay rose with their incomes, with larger 23 shares of those earning $40,000 a year or more willing to pay up to $200 monthly than those with lower incomes. Figure 23 Amount Willing to Pay to Buy into Medicare Before Age 65 Total Less than $40,000 50–64 $40,000 or more Percent of adults ages 50–64 and not on Medicare who are interested 73% 83% 68% in buying into Medicare Willing to pay $200 26 21 30 Willing to pay $100, 26 32 24 but not willing to pay $200 Willing to pay $50, 11 17 8 but not willing to pay $100 Not willing to pay $50 5 10 3 Don’t know/refused to answer how 5 4 5 much willing to pay Note: Columns may not sum properly because of rounding. Source: The Commonwealth Fund Survey of Older Adults (2004). This finding suggests that premiums would have to be subsidized in order to facilitate early buy-in to Medicare. Assuming a community-rated annual premium of approximately $4,000, $200 per month would cover about 60 percent of premium costs, $100 would cover approximately 30 percent of premiums, and $50 would pay only 15 percent of premiums. Subsidies or tax credits for a buy-in could be linked to income, so that those with household incomes of less than 200 percent of poverty would pay no more than 5 percent of their income and those with higher incomes would pay no more than 10 percent.17 Half of Medicare Beneficiaries Interested in Consolidating Coverage The Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 provides beneficiaries a new Part D drug benefit offered exclusively through private plans. The plans can be stand-alone private drug insurance plans or Medicare Advantage managed care plans. Beneficiaries who remain in the traditional Medicare fee-for-service program will thus need three separate plans in order to have comprehensive benefits: Medicare Parts A and B, for hospital and physicians’ services; Part D, a prescription drug plan; and supplemental private coverage to help cover Medicare’s high cost-sharing and protect against catastrophic costs. 24 A different approach would be to allow traditional Medicare to offer an option of comprehensive benefits rolled into one plan, at an extra monthly cost of $100.18 The survey asked respondents how interested they would be in paying an extra $100 a month to Medicare to have all their health services, including prescription drugs, covered. A quarter of Medicare beneficiaries was very interested in this option and another quarter was somewhat interested (Figure 24). Interest was somewhat greater among higher- income beneficiaries. Nearly three of five (58%) of those in households with incomes of 200 percent of poverty or higher were very or somewhat interested in having this option compared with 46 percent of those with household incomes under 200 percent of poverty (data not shown). Figure 24 How Interested Would You Be in Paying an Extra $100 per Month to Medicare to Have All Your Health Services, Including Rx, Covered? Percent of respondents on Medicare Don’t know/Refused 3% Very interested 25% Not at all interested 34% Somewhat interested Not too interested 25% 13% Source: The Commonwealth Fund Survey of Older Adults (2004). Half of Older Adults are Interested in Elite Networks of Physicians The survey asked respondents whether, if Medicare or their insurance plan were to charge them a lower monthly premium if they agreed to go to doctors that provided the best care at the lowest cost, they would participate, even if it meant they had to change doctors. Half of adults 50 to 70 expressed interest in participating in such an option (Figure 25). There was more interest among those 50 to 64 than among those 65 and older: 53 percent of adults under age 65 were interested compared with just over a third (34%) of adults ages 65 to 70. Interest was greatest among older adults without coverage: more than three of five (64%) uninsured older adults said they would participate in such a plan (data not shown). 25 Figure 25 If Medicare or Your Insurance Plan Charged You a Lower Monthly Premium If You Agreed to Go to Doctors That Provided the Best Care at the Lowest Cost, Would You Participate, Even If It Meant You Had to Change Doctors? Percent of adults ages 50–70 who responded yes 75 53 50 50 34 25 0 Total, Ages 50–70 Ages 50–64 Ages 65–70 Source: The Commonwealth Fund Survey of Older Adults (2004). Most Older Adults Do Not Support Requirement to Have a Regular Doctor Few older adults agreed that their insurance plans should require them to have a medical home. The survey asked whether Medicare or insurance plans should require enrollees to sign up for a doctor who would be their regular source of care. Just over one-third (36%) of all respondents agreed with such a requirement (Figure 26). Those 65 and older were the most opposed to the idea: less than a quarter (24%) agreed that Medicare should require them to have a regular doctor. Figure 26 Should Medicare or Your Insurance Plan Require You to Sign Up for a Doctor Who Would Be Your Regular Source of Care? Percent of adults ages 50–70 who responded yes 75 50 36 39 24 25 0 Total, Ages 50–70 Ages 50–64 Ages 65–70 Source: The Commonwealth Fund Survey of Older Adults (2004). 26 CONCLUSION High rates of chronic health conditions among older adults make them a vulnerable population. Being uninsured or underinsured in any age group is risky, but older adults without adequate coverage are at particular risk of suffering adverse health events from skipping needed care, spending large shares of their income on out-of-pocket costs, and accumulating medical debt. Recent research by J. Michael McWilliams and colleagues has found that uninsured adults ages 55 to 64 have greatly reduced access to preventive care and estimates that more than 13,000 premature deaths occur annually in this age group because of a lack of health insurance coverage.19 In addition, a recent review of more than 20 studies of the impact of cost-sharing on health care use and the health status of people 65 and older found that increases in cost-sharing nearly always reduced the health care use and/or the health status of this population.20 Poor health can hinder older adults’ ability to participate in daily activities and accumulate income prior to retirement. Moreover, if adults in these vulnerable years postpone or do not receive essential care for chronic health conditions such as diabetes, arthritis, or high blood pressure, they are at risk of entering the Medicare program in deteriorating health and with much more costly medical conditions.21 Yet, despite evidence that exposure to medical costs is unhealthy for older adults and potentially harmful for the Medicare program and the U.S. economy overall, older adults are becoming less rather than better protected. According to the most recent U.S. Census data, the number of uninsured older adults ages 50 to 64 climbed from 5.5 million in 2000 to 6.4 million in 2003, with nearly all of the increase attributable to a decline in employer-sponsored coverage.22 In addition, the percentage of firms with 200 or more employees that offer retiree health benefits has fallen from 66 percent in 1988 to 36 percent in 2004.23 Companies that still offer retiree health benefits are making them less generous. According to a recent survey of large employers by the Kaiser Family Foundation and Hewitt Associates, 79 percent of companies said they had increased retiree premium contributions in the past year and more than half had increased drug copayments or coinsurance.24 The erosion of retiree health benefits is a financial blow to older adults. Hewitt Associates estimates that medical costs can add up to about 20 percent of annual pre- retirement income for workers who retire at age 65 without employer health benefits.25 Early retirees without employer coverage can expect to spend an estimated 40 percent of pre-retirement income on their medical expenses. While the new Medicare prescription drug benefit will offset some of those costs for beneficiaries, retirees without retiree health benefits will continue to see a large portion of their income go toward health care costs. 27 Recent research also shows that health savings accounts (HSAs), which have been promoted in part as a way for people to save for future health care costs, will have a limited impact on the overall savings of those who decide to use them.26 Moreover, people who open HSAs must have a high-deductible health plan of a least $1,000 for individuals and $2,000 for families. This means that, depending on whether and how much their employers contribute to their HSAs, participants’ ability to save for their retirement during their working years could be weakened by the demands on their incomes from higher out-of-pocket health costs. 27 So what is to be done? This survey shows strong interest among older adults to have a Medicare account in which they could set aside income to save for long-term and other health care expenses not covered by Medicare. In addition, a large majority of adults ages 50 to 64 would be interested in participating in the Medicare program before the age of 65. While a majority would be willing to pay a monthly premium in order to join, the responses indicate that the benefit would likely have to be subsidized to facilitate participation. Tax credits for a buy-in could be linked to income such that those with household incomes of less than 200 percent of poverty would pay no more than 5 percent of their income and those with higher incomes would pay no more than 10 percent. In addition to these options, eliminating the two-year waiting period for the disabled in the Medicare program would directly address the financial hardship of that population so clearly evident in this survey.28 Cutting back on the health care of older adults through the erosion of employee and retiree health benefits will serve only to worsen the health and financial status of older adults and magnify the financing issues currently looming before Medicare. Instead, targeted investments in their health care would likely make strides toward a more robust economy and a sustainable Medicare program. 28 Table 1. Demographic Characteristics of Older Adults by Age and Insurance Base: All respondents Insured Ages Ages Total Total 50–64 65–70 Insured Medicare Employer Individual Uninsured Total in Millions (estimated) 59.08 47.62 11.46 54.49 14.68 32.68 3.65 4.59 Percent Distribution 100% 81% 19% 92% 25% 55% 6% 8% Income Less than $25,000 23 21 33 21 42 9 10 50 $25,000–$39,999 16 16 19 16 17 16 21 20 $40,000–$59,999 15 16 13 16 11 18 23 8 $60,000 or above 31 34 16 31 12 45 32 5 Don’t know/Refused 15 13 19 14 19 13 14 17 Poverty Status Less than 200% poverty 24 22 32 21 40 10 12 51 200% poverty or above 64 68 51 67 43 80 78 34 Respondent’s Work Status Employed 55 63 21 55 16 73 64 52 Not currently employed 45 37 79 45 84 27 36 48 Retired 26 16 68 27 57 16 20 12 Not employed, 18 20 11 17 27 11 16 35 but not retired Self-Rated Health Status Excellent or very good 51 52 47 52 40 58 63 41 Good 27 26 30 27 28 26 28 25 Fair or poor 22 22 23 21 33 16 9 34 Race/Ethnicity White 76 75 82 77 78 79 78 65 Black 10 10 9 10 12 9 5 3 Hispanic 8 8 6 7 6 7 3 22 Marital Status Married 64 65 58 66 53 73 67 46 Not married 36 34 42 34 47 27 33 54 Political Affiliation Republican 28 27 33 29 29 29 42 20 Democrat 35 35 34 35 34 35 29 37 Independent 21 22 18 21 19 22 18 21 Other 9 10 6 9 8 9 5 13 Voter Registration Status Not registered 13 14 11 11 13 9 10 38 Registered 87 86 88 89 86 91 90 62 Source: The Commonwealth Fund Survey of Older Adults (2004). 29 Table 2. Health Status of Older Adults Ages 50 to 70, by Age and Poverty Status Base: All respondents Ages 50–64 Ages 65–70 <200% >200% <200% >200% Total Total Poverty Poverty Total Poverty Poverty Total in Millions (estimated) 59.08 47.62 10.41 32.16 11.46 3.63 5.86 Percent Distribution — — 22% 68% — 32% 51% Self-rated health status Excellent or very good 51 52 28 60 47 28 59 Good 27 26 25 26 30 36 25 Fair or poor 22 22 46 14 23 36 16 Disability or handicap 23 24 48 17 21 39 10 limits daily activities Current health conditions: Hypertension/ 39 36 46 33 50 64 42 high blood pressure Heart disease/heart attack 13 12 21 10 18 17 17 Cancer 5 5 8 4 8 11 7 Diabetes 15 13 21 10 23 32 18 Arthritis 37 34 48 31 47 56 45 High cholesterol 35 34 38 32 42 47 38 Any of the above conditions 70 67 75 64 84 93 81 Has health problems* 74 71 81 67 85 95 82 * Rates own health as fair or poor, has limits on daily activities, or has chronic health problem or condition. Source: The Commonwealth Fund Survey of Older Adults (2004). 30 Table 3. Insurance History of Older Adults Ages 50 to 70, by Age and Poverty Status Base: All respondents Ages 50–64 Ages 65–70 <200% >200% <200% >200% Total Total Poverty Poverty Total Poverty Poverty Total in Millions (estimated) 59.08 47.62 10.41 32.16 11.46 3.63 5.86 Percent Distribution — — 22% 68% — 32% 51% Insurance Type Medicare 25 8 23 3 94 95 93 Employer 55 68 32 80 4 1 6 Individual 6 7 4 9 1 0 2 Other 6 7 18 3 1 3 0 Uninsured 8 10 22 5 — 1 0 Insurance History Insured continuously, no gaps 76 76 50 85 77 62 85 Uninsured now 8 10 22 5 — 1 0 Insured now, time uninsured 7 7 13 5 6 14 0 in past year Insured all year, time uninsured 10 8 15 5 17 23 16 since age 50 General Experience with Health Insurance as Adult Insured all of the time 63 60 33 69 72 51 82 Insured most of the time 23 25 32 24 16 27 13 Only insured some of the time 7 8 17 4 6 10 3 Rarely or never insured 6 7 17 2 5 12 1 Source: The Commonwealth Fund Survey of Older Adults (2004). 31 Table 4. Health Insurance Expenses of Older Adults Ages 50 to 70, by Age and Insurance Base: All respondents Insured Ages Ages Total Total 50–64 65–70 Insured Medicare Employer Individual Total in Millions (estimated) 59.08 47.62 11.46 54.49 14.68 32.68 3.65 Percent Distribution 100% 81% 19% 92% 25% 55% 6% Insurance Premium Expenses Monthly premium costs (Respondents who are insured) (q49) None 19 20 14 19 17 16 3 Less than $100 29 27 35 29 40 27 14 $100–$199 19 18 23 19 19 21 8 $200–$299 10 10 9 10 8 11 16 $300–$499 10 11 6 10 4 11 28 $500 or more 6 6 3 6 2 6 26 Spent annually 5% or more of income 23 23 22 23 22 21 57 Spent annually 10% or more of income 10 10 11 10 10 8 33 Paying premium is very or somewhat difficult: 34 34 32 34 37 27 62 (Respondents who pay a premium) Annual Deductible Per Person (Respondents who are insured) No deductible 36 37 35 36 39 33 19 Less than $500 34 32 41 34 38 37 12 $500–$999 10 11 8 10 7 12 12 $1,000–$1,999 5 6 3 5 2 5 18 $2,000 or more 3 4 1 3 — 2 24 Source: The Commonwealth Fund Survey of Older Adults (2004). 32 Table 5. Health Care Expenses of Older Adults Ages 50 to 70, by Age and Insurance Base: All respondents Insured Ages Ages Total Total 50–64 65–70 Insured Medicare Employer Individual Uninsured Total in Millions (estimated) 59.08 47.62 11.46 54.49 14.68 32.68 3.65 4.59 Percent Distribution 100% 81% 19% 92% 25% 55% 6% 8% Prescription Drug Expenses Has prescription drug coverage 85 89 71 85 67 95 72 na (Respondents who are insured) Takes prescription drugs on 70 68 81 73 84 69 59 42 regular basis Monthly out-of-pocket prescription drug expenses: (Respondents who take prescription drugs regularly) Up to $25 37 38 32 37 34 37 * * $26–$50 21 22 18 22 15 27 * * $51–$100 19 19 20 19 19 19 * * More than $100 19 19 24 19 26 16 * * Spent annually 5% or more of income 15 13 21 14 25 8 * * Spent annually 10% or more of income 6 6 9 6 12 3 * * Annual Out-of-Pocket Medical Expenses, including Prescription Drugs Less than $100 23 22 25 22 26 19 15 28 $100–$499 36 36 35 36 33 40 30 25 $500–$999 16 15 18 16 16 17 17 11 $1,000–$4,999 20 20 16 19 17 20 27 26 $5,000 or more 3 4 2 3 3 2 8 10 Spent annually 5% or more of income 16 16 17 15 21 11 26 29 Spent annually 10% or more of income 7 7 8 6 10 3 11 24 Total Annual Out-of-Pocket Medical Expenses** Less than $500 22 23 18 19 21 16 5 53 $500–$999 21 20 24 22 25 21 13 11 $1,000–$2,499 18 16 23 19 22 21 4 0 $3,000–$5,499 24 24 24 24 23 25 28 26 $5,500–$9,999 11 12 7 11 6 12 36 10 $10,000 or more 3 4 2 4 2 4 14 0 Spent annually 5% or more of income 37 36 41 38 43 33 64 29 Spent annually 10% or more of income 18 18 20 18 23 14 40 24 * Not shown due to insufficient sample size. ** Includes health insurance premiums (for insured only) and medical expenses including prescription drugs. Source: The Commonwealth Fund Survey of Older Adults (2004). 33 Table 6. Access Barriers and Medical Bill Problems by Age and Insurance Base: All respondents Insured Ages Ages Total Total 50–64 65–70 Insured Medicare Employer Individual Uninsured Total in Millions (estimated) 59.08 47.62 11.46 54.49 14.68 32.68 3.65 4.59 Percent Distribution 100% 81% 19% 92% 25% 55% 6% 8% Access Problems in Past Year Went without needed care in past year due to costs: Did not fill prescription 15 16 12 14 18 12 14 30 Skipped recommended test or follow up 11 13 5 9 9 8 18 35 Had a medical problem, did not visit doctor 11 13 4 9 9 7 15 40 or clinic Did not get needed specialist care 9 10 4 7 7 7 12 27 At least one of four access problems due to inability to pay 24 26 17 21 23 18 32 57 Medical Bill Problems in Past Year Not able to pay medical bills 18 19 13 16 20 12 20 39 Contacted by a collection agency for medical bills 15 15 11 14 18 11 11 26 Had to change way of life to pay bills 14 15 14 13 19 9 17 32 Any bill problem 27 28 22 25 30 21 30 50 Medical bills/debt being paid over time 11 12 7 11 8 12 12 8 Base: Any bill problem or medical debt 35 37 27 33 35 30 39 54 Insurance status of person/s when having difficulties with medical bills Insured at time care was provided 73 70 88 80 80 86 * * Uninsured at time care was provided 25 28 10 18 18 13 * * * Not shown due to insufficient sample size. Source: The Commonwealth Fund Survey of Older Adults (2004). 34 Table 7. Access Barriers and Medical Bill Problems, by Age and Poverty Base: All respondents Ages 50–70 Ages 50–64 Ages 65–70 <200% >200% <200% >200% <200% >200% Total Poverty Poverty Total Poverty Poverty Total Poverty Poverty Total in Millions (estimated) 59.08 14.04 38.02 47.62 10.41 32.16 11.46 3.63 5.86 Percent Distribution 100% 24% 64% — 22% 68% — 32% 51% Access Problems in Past Year Went without needed care in past year due to costs: Did not fill prescription 15 29 11 16 32 11 12 21 7 Skipped recommended test or follow up 11 19 9 13 22 10 5 10 4 Had a medical problem, did not visit 11 21 8 13 25 9 4 10 1 doctor or clinic Did not get needed specialist care 9 17 7 10 19 8 4 8 3 At least one of four access problems due to 24 41 19 26 45 20 17 28 13 inability to pay Medical Bill Problems in Past Year Not able to pay medical bills 18 37 12 19 40 13 13 29 5 Contacted by a collection agency for medical 15 30 10 15 32 11 11 24 6 bills Had to change way of life to pay bills 14 33 8 15 34 9 14 30 5 Any bill problem 27 51 19 28 54 21 22 41 12 Medical bills/debt being paid over time 11 12 11 12 14 12 7 9 7 Base: Any bill problem or medical debt 35 57 28 37 60 30 27 46 18 Insurance status of person/s when having difficulties with medical bills Insured at time care was provided 73 61 82 70 53 82 88 * * Uninsured at time care was provided 25 37 17 28 44 18 10 * * * Not shown due to insufficient sample size. Source: The Commonwealth Fund Survey of Older Adults (2004). 35 Table 8. Medicare Beneficiaries: Insurance History, Ratings of Medicare, and Comparisons to Insurance Before Eligible for Medicare Base: All respondents on Medicare Age Group Poverty Level All on 50–64 <200% >200% Medicare 65–70 Disabled Poverty Poverty Total Millions (estimated) 14.68 10.80 3.87 5.86 6.37 Percent Distribution 100% 74% 26% 40% 43% Uninsured right before Medicare 24 18 41 38 11 Insurance History Insured continuously, no gaps 76 77 68 62 84 Insured now, time uninsured in past year 8 6 15 14 4 Insured all year, time uninsured since age 50 17 17 17 24 11 General experience with health insurance as adult Insured all of the time 63 71 40 44 78 Insured most of the time 23 17 40 34 15 Only insured some of the time 6 6 7 9 3 Rarely or never insured 7 6 13 14 3 Importance of Becoming Eligible for Medicare Very important 71 66 84 85 58 Somewhat important 14 16 9 10 17 Not too/not at all important 14 17 6 3 24 Rating of Medicare Excellent 13 13 13 11 15 Very good 24 24 21 24 22 Good 31 32 28 27 33 Fair or poor 27 25 35 33 25 Don’t know/Refused 4 5 2 4 5 Comparison of Medicare to Before Becoming Eligible for Medicare (Respondents insured before Medicare) Overall insurance is better now 23 22 30 27 17 Overall insurance is worse 14 12 24 14 15 Overall insurance is about the same 59 63 44 56 34 Choice of doctors is better now 11 9 18 11 12 Choice of doctors is less 8 5 22 10 7 Choice of doctors about the same 75 79 57 74 75 Spend more time on insurance paperwork now 7 5 15 10 7 Spend less time on insurance paperwork 30 30 32 34 27 Spend about the same time on insurance paperwork 55 56 52 49 61 Source: The Commonwealth Fund Survey of Older Adults (2004). 36 Table 9. Experiences with Health Insurance Base: All respondents currently insured Insurance Source Total Ages Ages Insured 50–64 65–70 Medicare Employer Individual Total in Millions (estimated) 54.49 43.06 11.43 14.68 32.68 3.65 Percent Distribution 100% 79% 21% 27% 60% 7% Rating of current insurance Excellent 23 21 30 27 22 12 Very good 32 32 30 28 35 20 Good 29 29 29 29 28 37 Fair or poor 15 17 10 14 14 27 Choice in where to go for medical care A great deal 46 43 56 52 44 47 A fair amount 40 42 32 34 44 36 Not too much/no choice at all 13 14 8 11 11 17 In current health plan ever a time when: Doctor charged a lot more than insurance would pay 19 19 18 19 18 30 Doctor did not accept or participate in insurance plan 23 26 13 18 24 22 You reached limit of what insurance would pay 11 12 7 9 11 12 for treatment Any type of problem with health insurance 38 41 29 34 38 46 Had to fill out paper work for health care in past 37 40 28 29 39 44 year: If so, how much of a problem was this? A big problem 8 8 7 7 8 12 A small problem 25 26 17 24 26 23 Not a problem 67 65 76 70 66 62 How much of problem is getting insurance to pay for doctor or hospital medical bills? A big problem 5 5 4 4 4 5 A small problem 17 19 9 12 19 21 Not a problem 77 75 83 81 75 68 Source: The Commonwealth Fund Survey of Older Adults (2004). 37 Table 10. Concerns about Affordability, Confidence in Future Care, and Satisfaction with Quality of Care Base: All respondents Insured Ages Ages Total Total 50–64 65–70 Insured Medicare Employer Individual Uninsured Total in Millions (estimated) 59.08 47.62 11.46 54.49 14.68 32.68 3.65 4.59 Percent Distribution 100% 81% 19% 92% 25% 55% 6% 8% How worried are you that you won’t be able to afford the medical care you will need? Very worried 30 32 23 28 26 28 35 53 Somewhat worried 33 35 28 34 30 36 36 24 Not too worried 17 16 23 18 20 18 11 8 Not at all worried 18 17 25 19 23 17 18 10 How worried are you that health insurance will become so expensive you will not be able to afford it? Very worried 40 42 33 38 37 37 48 63 Somewhat worried 31 32 26 32 26 35 29 22 Not too worried 14 12 21 15 17 15 9 2 Not at all worried 15 13 20 15 18 13 14 11 Overall, how satisfied are you with the quality of health care you have received in the past 12 months? Very satisfied 54 52 64 57 60 58 41 23 Somewhat satisfied 26 28 20 27 22 28 37 19 Somewhat dissatisfied 6 6 5 6 6 5 7 4 Very dissatisfied 6 6 4 4 6 3 4 21 Not received health care 7 7 6 5 5 5 9 30 How confident are you that you will get the best medical care available when you need it? Very confident 49 47 60 52 56 52 45 18 Somewhat confident 32 34 27 33 28 35 40 23 Not too confident 9 10 6 9 8 9 11 11 Not at all confident 7 8 5 5 6 4 4 39 How worried are you that you won’t be able to get the type of specialist you will need? Very worried 27 28 20 25 24 24 28 52 Somewhat worried 31 32 27 32 29 33 34 21 Not too worried 20 19 24 21 21 22 17 12 Not at all worried 22 20 29 22 26 21 21 12 Source: The Commonwealth Fund Survey of Older Adults (2004). 38 Table 11. Trust in Sources of Coverage for Older Adults Under Age 65 Base: All respondents Which would you trust more to provide health insurance for people age 50 to 64? Private Individual None of These/ Medicare Employers Market Don’t Know Total 38% 28% 24% 9% Age 50–64 38 28 25 9 50–54 35 32 24 9 55–59 39 27 26 5 60–64 41 24 26 9 65–70 39 30 20 10 Gender Men 39 28 24 7 Women 37 28 24 10 Region of the United States Northeast 36 28 22 14 Northcentral 38 34 22 6 South 41 25 25 8 West 35 29 27 8 Race/Ethnicity White 35 30 26 8 Black 58 27 11 4 Hispanic 50 16 17 17 Insurance Status Uninsured 58 8 22 13 Employer 30 37 25 8 Medicare 45 24 21 11 Individual 39 10 41 10 Other 63 12 17 7 Income Less than $25,000 54 18 19 8 $25,000–$39,999 37 32 22 8 $40,000–$59,999 33 31 27 9 $60,000 or above 29 35 29 8 Poverty Less than 200% poverty 54 18 20 8 200% poverty or above 32 33 27 9 Work Status Employed 35 33 24 8 Not currently employed 42 22 25 11 Self-Rated Health Status Excellent or very good 34 31 27 8 Good 39 30 23 7 Fair or poor 47 21 19 13 Political Affiliation Democrat 44 29 18 9 Republican 28 31 31 9 Independent 38 28 28 6 Other 43 26 20 10 Voter Registration Status Not registered 53 18 18 11 Registered 36 30 25 9 Note: Rows may not sum to 100% because of rounding. Source: The Commonwealth Fund Survey of Older Adults Ages (2004). 39 Table 12. Retirement Security: Confidence, Savings, and Importance of Health Insurance Base: All respondents Ages 50–64 Ages 65–70 <200% >200% <200% >200% Total Total Poverty Poverty Total Poverty Poverty Total in Millions (estimated) 59.08 47.62 10.41 32.16 11.46 3.63 5.86 Percent Distribution — — 22% 68% — 32% 51% Overall confidence in having enough income and savings to live comfortably in retirement Very confident 17 15 4 18 22 9 28 Somewhat confident 43 42 24 48 47 37 56 Not too confident/Not at all confident 39 41 69 32 29 50 15 Total savings for retirement Under $25,000 38 39 81 26 38 76 22 $25,000 to under $50,000 10 10 5 13 10 9 14 $50,000 to under $100,000 11 11 5 14 9 5 14 $100,000 or more 25 26 2 37 21 4 37 Have retiree health insurance through your (or spouse’s) employer 48 54 * 60 42 * 51 (Respondents who are retired) Your (or spouse’s) employer provides retiree health benefits once you retire 38 39 21 43 24 * * (Respondents/spouses currently working) Have or expect to have retiree health insurance: 36 36 14 44 34 19 42 Changes in retiree health insurance: (Respondents have or expect to have retiree health insurance) Cuts in benefits covered by insurance plan 27 25 * 26 33 * 33 Increases in how much you have to pay for 48 48 * 50 50 * 51 medical services Heard of recent plans to cut benefits or 28 29 * 30 24 * 23 increase costs you will have to pay In making your decision about when to retire: How important will the availability of health insurance be? (Respondents currently working/looking for work) Very important 66 67 76 66 * * * Somewhat important 18 18 10 20 * * * Not too/not at all important 14 13 10 13 * * * How much was the availability of affordable health insurance? (Respondents who are retired) Very important 58 59 * 60 58 * 62 Somewhat important 12 12 * 10 13 * 13 Not too/not at all important 25 26 * 27 24 * 21 * Not shown due to insufficient sample size. Source: The Commonwealth Fund Survey of Older Adults (2004). 40 Table 13. Interest in Medicare Health Accounts for Long-Term Care and Other Medical Expenses Not Covered by Medicare Base: All respondents in working families Thinking about paying for your healthcare in the future, would you be interested in having 1 percent of your (and/or your spouse’s) earnings deducted from your paycheck(s), tax free, and placed in your own Medicare account(s) to use for long term care or other expenses not covered by Medicare, (when you become covered by Medicare)? Yes, would be interested No, would not be interested Don’t Know/Refused Total 69% 24% 7% Age 50–64 71 23 6 50–54 76 19 4 55–59 67 24 8 60–64 64 27 9 65–70 48 42 10 Gender Men 69 25 6 Women 69 23 8 Region of the United States Northeast 75 20 5 Northcentral 68 27 6 South 68 24 7 West 66 25 9 Race/Ethnicity White 70 24 6 Black 71 23 6 Hispanic 60 25 15 Insurance Status Uninsured 59 27 15 Employer 73 22 5 Medicare 48 40 12 Individual 61 28 11 Other 75 21 4 Income Less than $25,000 69 26 6 $25,000–$39,999 67 25 8 $40,000–$59,999 73 21 5 $60,000 or above 72 24 4 Poverty Less than 200% poverty 67 26 8 200% poverty or above 71 24 5 Work Status Employed 69 25 6 Not currently employed 68 22 10 Self-Rated Health Status Excellent or very good 69 25 5 Good 68 25 7 Fair or poor 68 22 10 Political Affiliation Democrat 68 24 7 Republican 71 24 5 Independent 71 23 6 Other 69 25 6 Voter Registration Status Not registered 67 21 12 Registered 69 25 6 Note: Rows may not sum to 100% because of rounding. Source: The Commonwealth Fund Survey of Older Adults Ages (2004). 41 Table 14. Interest in Enrolling in Medicare Before Age 65 Base: Adults ages 50–64 and not on Medicare If Medicare were available to people age 50 to 64, how interested would you be in getting Medicare insurance before you turn 65? Very Interested Somewhat Interested Not Too Interested Not Interested at All Total 41% 32% 12% 13% Age 50–54 38 36 13 9 55–59 43 31 10 14 60–64 43 26 10 17 Gender Men 38 34 10 15 Women 44 30 13 11 Region of the United States Northeast 42 28 15 12 Northcentral 40 32 10 13 South 43 33 11 11 West 38 33 11 15 Race/Ethnicity White 37 33 13 14 Black 56 29 8 5 Hispanic 55 29 6 4 Insurance Status Uninsured 70 24 1 4 Employer 34 34 14 14 Medicare — — — — Individual 58 26 4 8 Other 49 26 8 15 Income Less than $25,000 64 22 6 6 $25,000–$39,999 50 31 9 7 $40,000–$59,999 40 33 12 12 $60,000 or above 30 36 14 16 Poverty Less than 200% poverty 64 20 7 7 200% poverty or above 36 35 13 13 Work Status Employed 41 31 13 13 Not currently employed 42 34 9 12 Self-Rated Health Status Excellent or very good 36 32 14 15 Good 42 34 9 11 Fair or poor 54 30 7 6 Political Affiliation Democrat 48 29 10 10 Republican 33 34 13 16 Independent 36 34 14 14 Other 46 33 7 11 Voter Registration Status Not registered 55 31 5 5 Registered 39 32 13 14 Note: Rows may not sum to 100% because of rounding and because “Don’t know/Refused to answer” not shown. Source: The Commonwealth Fund Survey of Older Adults Ages (2004). 42 APPENDIX. SURVEY METHODOLOGY The Commonwealth Fund Survey of Older Adults was conducted by International Communications Research from September 14 through November 21, 2004. The survey consisted of 25-minute telephone interviews in either English or Spanish and was conducted among a random, nationally representative sample of 2,007 adults ages 50 to 70 living in the continental United Sates. The study included 1,591 adults ages 50 to 64 and 416 adults ages 65 to 70. Statistical results are weighted to make the results representative of all adults ages 50 to 70 in the continental United States. The data are weighted to the U.S. adult population by age, sex, race/ethnicity, education, and geographic region using the 2004 March Supplement of the Current Population Survey. The resulting weighted sample is representative of the approximately 59 million adults ages 50 to 70, including 48 million adults ages 50 to 64 and 11 million adults ages 65 to 70. The study classified adults by age, annual household income, and insurance status at the time of the survey. Fifteen percent of adults 50 to 70 did not provide sufficient income data for classification by income or poverty. We asked respondents whether, when surveyed, they had the following types of insurance: Medicare, employer-sponsored, individually purchased, Medicaid, or insurance through any other source (including military or veteran’s coverage). Respondents who had none of these insurance sources were classified as uninsured. Although respondents were allowed to report multiple sources of insurance, in this analysis only mutually exclusive insurance categories were allowed. Thus, respondents reporting multiple sources of insurance were classified into one category using a hierarchy. For individuals under 65 years, the hierarchy for insurance was employer, Medicare, Medicaid, individual, or other. For adults 65 years and older with multiple sources of coverage, the principal source of insurance was always Medicare, followed by employer, Medicaid, individual, and other. The survey has an overall margin of sampling error of +/– 2.29 percentage points at the 95 percent confidence level. For the sample of adults ages 50 to 64 and those ages 65 to 70, the margins of error are +/– 2.58 and +/– 4.98 percentage points, respectively. The 71.6 percent survey response rate was calculated consistent with standards of the American Association for Public Opinion Research. 43 NOTES 1 All reported differences are statistically significant at p < .05 or better, unless otherwise noted. 2 J. Gabel et al., “Health Benefits in 2004: Four Years of Double-Digit Premium Increases Take Their Toll on Coverage,” Health Affairs 23 (September/October 2004): 200–209; Bureau of Labor Statistics, Employment Cost Index for Civilian Workers, Wages and Salaries, http://data.bls.gov. 3 J. Gabel et al., 2004; S. R. Collins, C. Schoen, M. M. Doty, A. L. Holmgren, Job-Based Health Insurance in the Balance: Employer Views of Coverage in the Workplace (New York: The Commonwealth Fund, March 2004). 4 Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits, 2004 Annual Survey; P. Fronstin, The Impact of the Erosion of Retiree Health Benefits on Workers and Retirees, Issue Brief No. 279 (Washington: Employee Benefit Research Institute, March 2005). 5 J. M. McWilliams, A. M. Zaslavsky, E. Meara, J. Z. Ayanian, “Health Insurance Coverage and Mortality Among the Near Elderly,” Health Affairs 23 (July/August 2004): 223–233; J. M. McWilliams, A. M. Zaslavsky, E. Meara, J. Z. Ayanian, “Impact of Medicare Coverage on Basic Clinical Services for Previously Uninsured Adults,” Journal of the American Medical Association 290 (August 13, 2003): 757–764; D. W. Baker, et al., “Lack of Health Insurance and Decline in Overall Health in Late Middle Age,” New England Journal of Medicine 345 (October 11, 2001): 1106–1112. 6 P. F. Short, D. G. Shea, M. P. Powell, “Health Insurance for Americans Approaching Age Sixty-five: An Analysis of Options for Incremental Reform,” Journal of Health Politics, Policy and Law 28 (February 2003): 41–76. 7 S. R. Collins, C. Schoen, K. Tenney, M. M. Doty, A. Ho., Rite of Passage? Why Young Adults Become Uninsured and How New Policies Can Help (New York: The Commonwealth Fund, May 2005). 8 All reported differences are statistically significant at p < .05 or better, unless otherwise noted. 9 C. Schoen, M. M. Doty, S. R. Collins, A. L. Holmgren, “Insured But Not Protected: How Many Adults Are Underinsured?” Health Affairs Web Exclusive (June 14, 2005): W5-289–W5-302. 10 Difference between Medicare and individual coverage is not statistically significant. 11 Differences statistically significant between those with deductibles of less than $500 and those with deductibles of $1,000 or more. 12 Only the difference between uninsured and other coverage sources is statistically significant. 13 Differences statistically significant between those with no deductible or deductibles of less than $500 and those with deductibles of $500 or more. 14 S. B. Dale and J. M. Verdier, Elimination of Medicare’s Waiting Period for Seriously Disabled Adults (New York: The Commonwealth Fund, July 2003). 15 The difference between those with Medicare and individual coverage is statistically significant at p < .05. The difference between those with employer and individual coverage is not statistically significant. 16 The difference between those with Medicare and individual coverage is statistically significant at p < .05. The difference between those with employer coverage and individual coverage is not statistically significant. 17 K. Davis and C. Schoen, “Creating Consensus on Coverage Choices,” Health Affairs Web Exclusive (23 April 2003): W3-199–W3-211. 18 K. Davis, M. Moon, and B. Cooper, “Medicare Extra: A Comprehensive Benefits Option for Medicare Beneficiaries.” Under review. 19 J. M. McWilliams, A. M. Zaslavsky, E. Meara, J. Z. Ayanian, “Health Insurance Coverage and Mortality Among the Near Elderly,” Health Affairs 23(4): 223–233; J. M. McWilliams et al., 2003. 20 T. Rice and K. Y. Matsuoka, “The Impact of Cost-Sharing on Appropriate Utilization and Health Status: A Review of the Literature on Seniors,” Medical Care Research and Review 16 (December 2004): 415–452. 44 21 R. B. Friedland and L. Summer, Demography Is Not Destiny, Revisited (New York: The Commonwealth Fund, March 2005). 22 Analysis of the March 2004 Current Population Survey by Sherry Glied and Douglas Gould of Columbia University; C. DeNavas-Walt, B. D. Proctor, and R. J. Mills, Income, Poverty and Health Insurance Coverage in the United States: 2003, Current Population Reports, U.S. Census Bureau, August 2004; R. J. Mills and S. Bhandari, Health Insurance Coverage in the United States: 2002, Current Population Reports, U.S. Census Bureau, September 2003. 23 Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits, 2004 Annual Survey. 24 Kaiser Family Foundation and Hewitt Associates, Current Trends and Future Outlook for Retiree Health Benefits: Findings from the Kaiser/Hewitt 2004 Survey on Retiree Health Benefits, December 2004; P. Fronstin, The Impact of the Erosion of Retiree Health Benefits on Workers and Retirees, Issue Brief No. 279 (Washington, D.C.: Employee Benefit Research Institute, March 2005). 25 Hewitt Associates, Total Retirement Income at Large Companies: The Real Deal, June 2004. Available at http://was4.hewitt.com/hewitt/resource/newsroom/pressrel/2004/06-28-04_study.htm. 26 P. Fronstin and D. Salisbury, Health Care Expenses in Retirement and the Use of Health Savings Accounts, Issue Brief No. 271 (Washington: Employee Benefit Research Institute, July 2004) 27 K. Davis, M. M. Doty, A. Ho, How High Is Too High? Implications of High Deductible Health Plans (New York: The Commonwealth Fund, April 2005). 28 S. B. Dale and J. M. Verdier, July 2003. 45 RELATED PUBLICATIONS Paying More for Less: Older Adults in the Individual Insurance Market—Findings from the Commonwealth Fund Survey of Older Adults (June 2005). Sara R. Collins, Cathy Schoen, Michelle M. Doty, Alyssa L. Holmgren, and Sabrina K. How. Survey findings reveal that adults ages 50 to 64 who rely on individual market insurance pay much higher premiums than their counterparts with employer coverage. Yet these older adults have far less comprehensive coverage and are more likely to face insurance restrictions and administrative complications. Medicare Health Accounts: A New Policy Option to Help Adults Save for Health Care Expenses Not Covered by Medicare—Findings from the Commonwealth Fund Survey of Older Adults (June 2005). Sara R. Collins, Karen Davis, Sabrina K. How, and Alyssa L. Holmgren. Nearly seven of 10 older adults ages 50 to 70 said they would be interested in having a “Medicare Health Account,” into which up to 1 percent of earnings could be deposited to cover retirees’ costs of long-term care, home health, and other expenses not covered by Medicare. A Shared Responsibility: U.S. Employers and the Provision of Health Insurance to Employees (Spring 2005). Sara R. Collins, Karen Davis, and Alice Ho. Inquiry, vol. 42, no. 1 (In the Literature summary). Much of the health care costs of the nearly 36 million workers without job-based coverage are being picked up by other employers through dependent coverage, by public programs, and by employees themselves, this Fund study finds. Insured But Not Protected: How Many Adults Are Underinsured? (June 14, 2005). Cathy Schoen, Michelle. M. Doty, Sara R. Collins, and Alyssa. L. Holmgren. Health Affairs Web Exclusive (June 14, 2005). In addition to 45 million uninsured U.S. adults, another 16 million were underinsured in 2003, according to this study by Commonwealth Fund researchers. The authors find that inadequate coverage—much like no coverage at all—creates obstacles to care and other burdens. Variations in the Impact of Health Coverage Expansion Proposals Across States (June 7, 2005). Sherry Glied and Douglas Gould. Health Affairs Web Exclusive (In the Literature summary). While some states could reduce their uninsured rate by as much as 20 percent under federal proposals such as tax credits or public program expansions, other states might not see much change at all. How High Is Too High? (April 2005). Karen Davis, Michelle M. Doty, and Alice Ho. Commonwealth Fund researchers say tax incentives for the purchase of high-deductible health plans will have little effect on health coverage rates, because premiums are too high for the many uninsured Americans living near the poverty level. The Effect of Health Savings Accounts on Health Insurance Coverage (April 2005). Sherry Glied and Dahlia Remler. Fewer than 1 million of the nation's 45 million uninsured are likely to get new health coverage from health savings accounts coupled with high-deductible health plans, this issue brief finds. Discount Medical Cards: Innovation or Illusion? (March 2005). Mila Kofman, Jennifer Libster, and Eliza Bangit. As double-digit premium increases of the last four years have made health insurance unaffordable for many consumers, some businesses and individuals are using discount cards as a substitute for health insurance coverage. Early Implementation of the Health Coverage Tax Credit in Maryland, Michigan, and North Carolina: A Case Study Summary (April 2005). Stan Dorn, Tanya Alteras, and Jack A. Meyer. Despite a promising start, a federal tax credit program designed to help displaced workers buy health insurance is still experiencing disappointingly low enrollment rates more than a year after its implementation, according to the Economic and Social Research Institute. 46