WILL HEALTH CARE COSTS ERODE RETIREMENT SECURITY? By Richard W. Johnson and Rudolph G. Penner* Introduction A N I S S U E IN B R I E F Retirement security depends on both the income of the aged and their consumption needs. Several recent studies CENTER FOR project that the Baby Boomers, who were born between 1946 and 1964 and are now approaching traditional RETIREMENT retirement ages, will on average receive more income in later life than earlier generations of older Americans.1 But increases over time in consumption needs might offset RESEARCH these income gains. In particular, rising health care costs AT BOSTON COLLEGE may threaten the Baby Boomers’ retirement security. This brief projects future income and out-of-pocket health care OCTOBER 2004, NUMBER 23 spending at older ages. If current policies continue, income after taxes and health care spending for the typical INSIDE older married couple will be no higher in 2030 than it was INTRODUCTION .........................................1 in 2000 — despite 30 years of productivity growth. The increased health care burden will be particularly painful for HEALTH SPENDING AT OLDER AGES ................1 those at the lower end of the income distribution who do not qualify for Medicaid. FUTURE INCOME AND HEALTH COSTS ............ 2 ...............................3 Health Spending at Older Ages FUTURE TA X BURDENS FUTURE INCOME AND COSTS FOR TYPICAL Despite near universal Medicare coverage, many older OLDER AMERICANS ....................................3 Americans pay large out-of-pocket health care costs.2 They DISTRIBUTIONAL CONSIDERATIONS ............... 4 face three types of expenses. First, most pay Medicare premiums for optional Part B coverage, which helps pay for ALTERNATIVE HEALTH COST PROJECTIONS ...... 6 outpatient services. Beginning in 2006, beneficiaries will be able to obtain prescription drug coverage through CONCLUSION ........................................... 6 Medicare Part D, which will also require monthly premium ENDNOTES .............................................. 8 payments.3 Second, many older adults make premium payments to private insurance companies for supplemental REFERENCES ........................................... 9 Medigap insurance to cover Medicare deductibles and co- payments and to provide protection against catastrophic expenses. These policies are expensive, averaging about $175 per month in 2001 for a comprehensive policy with drug coverage.4 Other retirees receive supplemental retiree health insurance benefits from their former employers, but they generally must make contributions to their employers to defray part of the cost of coverage. Third, many older Americans make direct payments to health care providers, in the form of Medicare deductibles and co-payments and for services that are not covered by Medicare. These costs * The authors are research associates of the Center for Retirement Research at Boston College. Richard W. Johnson is a senior research associate at the Urban Institute and Rudolph G. Penner is a senior fellow and the Arjay and Frances Miller Chair in Public Policy at the Urban Institute. The authors thank Adeel Saleem for the income tax calculations used in the analysis. 2 Center for Retirement Research are especially high among those without supplemental coverage, but even those with Future Income and Health additional benefits generally share in some of the cost of services. Costs Health care costs have been rising steadily over To assess the potential impact of rising health care time, and the growth rate is unlikely to slow in the costs on the economic well-being of older next few decades. Health care spending increased at Americans, we project income and out-of-pocket an average rate of 5.1 percent per year in real terms spending to 2030, when the youngest Baby Boomers over the past 15 years.5 The Medicare trustees will be 66 years old. We examine outcomes for predict that program costs will grow rapidly over the unmarried adults ages 65 or older and married next 75 years, reaching 7 percent of the nation’s couples in which one or both spouses are at least 65 gross domestic product (GDP) in 2030 and 14 years old. The simulations are based on an Urban percent of GDP in 2080.6 In 2000, by comparison, Institute model that forecasts future demographic, Medicare consumed only 2 percent of GDP. Health social, and economic characteristics of the spending tends to rise with income, as people population by simulating births, deaths, marriages, choose to earmark part of their additional resources divorces, work decisions, and earnings.14 for better health care.7 Advances in medical The projection of health costs is based on the technology, which generally lead to better but more intermediate assumptions used by the Medicare expensive treatments, also contribute to rising trustees, which imply that real per beneficiary health spending levels.8 Other explanations for high health costs will grow at an average annual rate of 3.2 care expenditures include increases in the percent between 2000 and 2030.15 We assume that prevalence of expensive medical conditions, the per capita out-of-pocket payments to providers and high administrative costs associated with a private premiums grow at this rate. It roughly fragmented health care delivery and financing equals the actual growth rate in real per beneficiary system, and the presence of a large number of highly Medicare costs from 1990 to 2003, when costs grew paid medical specialists.9 relatively slowly, but falls nearly 1 percentage point Soaring health care costs threaten household below the actual rate from 1980 to 2003. Our budgets for older Americans, forcing many to spend projections account for the introduction of more on medical expenses. Premiums for Medicare Medicare prescription drug benefits,which will Parts B and D will rise with total Medicare spending, likely reduce beneficiaries’ out-of-pocket drug costs because premiums are set to cover 25 percent of and Medigap premium payments. Future Medicare program costs. In fact, the Medicare trustees predict premiums are also based on the trustees’ that by 2030 monthly Part B premiums will increase intermediate cost assumptions, which imply an to about $150 in today’s dollars, up from $66.60 in average annual real growth rate of 3.2 percent for 2004.10 Private insurance premiums and direct Part B premiums and 4.5 percent for Part D payments to providers will also increase with overall premiums. health care costs. For example, average Medigap Some low-income aged adults enroll in premiums increased by more than 10 percent per Medicaid, which provides free health care for those year between 1999 and 2001, after adjusting for who qualify. Eligibility rules vary by state, but the overall inflation.11 In addition, many employers are average income cut-off across all states was about responding to cost pressures by dropping retiree $8,000 in 2000, below the federal poverty health benefits or demanding larger contributions threshold.16 Most state programs also include from plan participants.12 medically needy provisions that grant Medicaid The new Medicare drug benefit will provide benefits to older adults with high out-of-pocket some additional protection for the aged, but most health care spending. In addition, Medicaid covers older Americans will continue to experience Medicare premiums for those with incomes at or substantial out-of-pocket drug costs. Under the below 120 percent of the poverty threshold but too standard plan, beneficiaries will face a deductible of high to qualify for full Medicaid benefits. Only $250 before the program pays any of their costs. about three-quarters of eligible older Americans Then they will face 25 percent co-payments on the enroll in Medicaid, which covered 12 percent of all next $2,000 of total drug spending. Beneficiaries non-institutionalized Medicare beneficiaries in will pay all of their drug costs themselves on 2001.17 Under current rules, eligibility will fall in spending between $2,250 and $5,100, but only 5 the future as real income growth reduces the share percent of total drug spending in excess of $5,100. of the older population with incomes below the A beneficiary with a $4,000 drug bill, then, would poverty threshold. The model assumes, however, pay $2,500 out of pocket.13 that virtually everyone who qualifies for Medicaid in Issue in Brief 3 the future will enroll, as rising health costs increase the value of obtaining coverage, outweighing any Future Income and Costs for perceived stigma attached to Medicaid enrollment. Typical Older Americans Future Tax Burdens Median before-tax income will grow steadily over time for older married couples, even after adjusting Our projections assume that Social Security, for inflation (see Table 1). We project that typical Medicare, and Medicaid continue to pay the older married couples will receive 38 percent more benefits defined by current law. Because the budget income in real terms in 2030 than in 2000. deficit would soar to intolerable levels without Income will increase in each decade, although significant tax increases, we assume that effective growth rates will slow over time. tax rates will increase substantially. We examine If current entitlement policies continue, what future outcomes would be if Congress raises however, typical older married couples will devote taxes by doing nothing. In this hypothetical almost all of these income gains to taxes and health scenario, taxes would rise as the tax cuts of 2001, care. Between 2000 and 2030, federal tax liabilities 2002, and 2003 automatically expire by the end of will more than quintuple, and total out-of-pocket the decade, and taxpayers move into higher tax health care spending will nearly triple, primarily brackets as real income grows and more taxpayers because of rising Medicare premiums and payments are exposed to the Alternative Minimum Tax, which to health care providers. As a result, the share of is not indexed for either inflation or real growth. after-tax income that the typical older married The Congressional Budget Office (CBO) estimates couple devotes to health care will increase from 16 that this strategy raises the total tax burden to 22.6 percent in 2000 to 35 percent in 2030. Real after- percent of GDP in 2030.18 Individual tax burdens tax income net of health spending will rise slowly would rise even more rapidly, because personal between 2000 and 2020, and then decline between income taxes are most afflicted by automatic tax 2020 and 2030. Median income net of out-of- increases. By 2030, personal income taxes would pocket health spending and taxes for older married rise to 13.3 percent of GDP, a 60-percent increase couples in 2030 will not significantly exceed what it over the 30-year average of 8.3 percent.19 These tax was in 2000. increases are not sufficient to prevent a debt Older unmarried adults will better maintain explosion in the very long run, if health costs grow their economic position than married couples, but at historical rates. They are probably sufficient, rising health care costs will erode some income however, to keep the fiscal situation stable through gains for single people over the next quarter 2030. century. Before accounting for taxes or health care Assuming Congress does not intervene, future spending, median real income for older unmarried average federal income tax rates will rise rapidly for adults will increase by 50 percent between 2000 older married couples, who tend to receive more and 2030 (see Table 2). Federal taxes will rise by income than older unmarried individuals, primarily only $70 (in 2004 dollars) over the period, because because Social Security beneficiaries are subject to even in 2030 typical older single adults will not their own special kind of bracket creep. Up to 85 receive enough income to make their Social percent of Social Security benefits are taxable, but Security benefits subject to federal income taxes. only when income exceeds certain thresholds, which But health care costs will rise rapidly, consuming are not indexed either for inflation or real growth. nearly 30 percent of after-tax income in 2030, up By 2030, each additional dollar of before-tax from 17 percent in 2000. Almost one-half of the income received by the typical older married couple income gains experienced by typical older brings another 50 cents worth of Social Security unmarried adults over the next quarter century will benefits into taxable income. In 2000, by contrast, pay for higher health care costs. Median real the typical older couple did not pay taxes on any income net of taxes and health care spending will Social Security benefits. Our estimates show that increase by only 26 percent between 2000 and average federal income and payroll taxes for older 2030. married couples will rise from 1.9 percent in 2000 Health care spending, of course, can make to 7.7 percent in 2030. Average tax rates will not people better off. Increases in out-of-pocket costs, rise much for older unmarried adults, however, combined with higher government subsidies of because they generally do not receive much income medical services, will finance an ever greater beyond Social Security benefits.20 quantity and quality of health care. Individual welfare can even rise as income net of health care falls, because the improvement in health care that 4 Center for Retirement Research Table 1. Median Income and Health Care Spending for Older Married Couples, 2000-2030 2000 2010 2020 2030 Before-Tax Family Income ($) 36,800 42,380 47,400 50,690 Federal Taxes ($) 710 1,190 2,990 3,910 After-Tax Income ($) 36,090 41,180 44,410 46,780 Out-of-Pocket Health Care Spending ($) 5,760 9,810 12,950 16,400 After-Tax Income Net of Health Spending ($) 30,330 31,370 31,450 30,380 Health Spending as Share of After-Tax Income (%) 16.0 23.8 29.2 35.1 Table 2. Median Income and Health Care Spending for Older Unmarried Adults 2000-2030 2000 2010 2020 2030 Before-Tax Family Income ($) 15,380 17,690 20,320 23,130 Federal Taxes ($) 20 40 40 90 After-Tax Income ($) 15,360 17,650 20,270 23,040 Out-of-Pocket Health Care Spending ($) 2,660 4,180 5,300 6,970 After-Tax Income Net of Health Spending ($) 12,700 13,480 14,970 16,070 Health Spending as Share of After-Tax Income (%) 17.3 23.7 26.2 30.3 Source: Authors’ estimates. Note: All amounts are computed as the mean value between the 45th and 55th percentiles of the before-tax income distribution, approximately equal to the median value. Values are expressed in constant 2004 dollars. Estimates for married couples are restricted to couples in which at least one spouse is age 65 or older. Income projections come from the Urban Institute’s DYNASIM3 model. Health care cost projections are based on the intermediate assumptions used by the Medicare trustees. Components do not always sum to the total because of rounding. results from an increase in spending can couples declined steadily with income (see Figure 1). compensate for the reduction in consumption of The share devoted to health spending will rise over other goods. Otherwise, people would change their the next 30 years for all income groups, but behavior and break with past trends. For example, especially for those with limited incomes. For older adults might drop Medigap coverage and example, if current policies continue, those in the otherwise economize on out-of-pocket costs by bottom income quintile (whose before-tax income consuming fewer health care services. But they falls in the bottom 20 percent of the distribution) would probably continue to enroll in Medicare Parts would spend more than one-half of their after-tax B and D, because the government subsidizes 75 incomes on insurance premiums and medical percent of the cost of these programs. expenses, up 30 percentage points from the share in 2000. For those in the top income quintile, by Distributional Considerations contrast, the share would increase by only 8 percentage points. Median real after-tax income The financial burden of rising health care costs will net of health spending for older married couples be particularly painful at the lower end of the would fall between 2000 and 2030 for those in the income distribution. In 2000, health care spending bottom two income quintiles and remain essentially as a share of after-tax income for older married unchanged for those in the middle quintile (see Issue in Brief 5 Figure 2). Among older married couples, only those Older married couples with limited incomes in the top income quintile would experience large often face catastrophic health care costs because they gains in income over the next quarter century after lack Medicaid coverage. The median married accounting for taxes and health care spending. couple in the bottom income quintile received too much income in 2000 to qualify for full Medicaid benefits. Some couples with high health care costs qualify for benefits through Medicaid’s medically Figure 1. Health Care Spending as Share of After- needy provisions, but only after they have spent Tax Income for Older Married Couples, 2000 and much of their incomes on medical expenses. The 2030 holes in Medicaid coverage become even more obvious in 2030, as the growth in real incomes Median Share of Income Devoted to Health Care 60% 2000 2030 further shrinks the ranks of those eligible for 50% Medicaid. Medicaid better protects older unmarried adults 40% with limited incomes, but rising health costs impose 30% a severe burden on those with moderate incomes. In 2000, the typical older unmarried adult in the 20% bottom income quintile spent only 7 percent of after-tax income on health care, compared with 18 10% percent for the median unmarried adult in the second-from-the-bottom quintile, who did not 0% Bottom Second Third Fourth Top qualify for Medicaid benefits (see Figure 3). In 2030, the typical single person in the bottom Income Quintile income quintile will continue to receive Medicaid benefits through the medically needy provisions, but Source: Authors’ estimates.21 will have to spend down more income to qualify, as income grows faster than the Medicaid eligibility thresholds. Between 2000 and 2030, median real after-tax income net of health spending will remain Figure 2. Real After-Tax Income Net of Health essentially flat for older unmarried adults in the Spending for Older Married Couples, 2000 and bottom two income quintiles, will grow modestly for 2030 those in the next two quintiles, and will grow strongly for those in the top quintile (see Figure 4). Median Real Income Net of Health Care Spending $90,000 2000 2030 Figure 3. Health Care Spending as Share of After- $80,000 Tax Income for Older Unmarried Adults, 2000 and $70,000 2030 $60,000 Median Share of Income Devoted to Health Care 60% $50,000 2000 2030 $40,000 50% $30,000 40% $20,000 $10,000 30% $0 Bottom Second Third Fourth Top 20% Income Quintile 10% Source: Authors’ estimates.21 0% Bottom Second Third Fourth Top Income Quintile Source: Authors’ estimates.22 6 Center for Retirement Research Figure 4. Real After-Tax Income Net of Health older married couples in 2030 (see Table 3). The Spending for Older Unmarried Adults, 2000 and typical older unmarried adult will devote a similar 2030 share of after-tax income to health care (see Table 4). Under the high-cost assumption, in which annual health care costs grow 1 percentage point faster than Median Real Income Net of Health Care Spending $90,000 in the baseline case, health care costs in 2030 will 2000 2030 consume nearly half of after-tax income for the $80,000 typical older married couple if current policies $70,000 continue. $60,000 $50,000 $40,000 Conclusion $30,000 Our projections imply that by 2030, when the $20,000 youngest Baby Boomers are old enough to qualify for $10,000 Medicare, older adults will devote implausibly large shares of income to health care. Future out-of- $0 pocket spending will soar despite the introduction Bottom Second Third Fourth Top of costly new drug coverage for Medicare Income Quintile beneficiaries in 2006. As a result, many boomers may not be as well prepared for retirement as some Source: Authors’ estimates.22 studies suggest. The increased financial burden of heath care costs will be particularly painful for low- income adults who do not qualify for Medicaid. Scenarios in which lower-income groups spend State governments may need to expand Medicaid nearly half of their after-tax income on health care coverage in the future to better protect vulnerable seem implausible. Despite the large subsidies older adults, further increasing budgetary pressures. provided by Medicare Parts B and D, many of those How reliable are these long-run projections? not supported by Medicaid may opt out of the Some of the largest errors in forecasting the system. Almost certainly, Medigap insurance spending side of the budget over the medium term coverage and the consumption of any health care stem from misjudgments about the growth of services involving significant out-of-pocket Medicare and Medicaid costs. Given the spending would plummet. It is doubtful that society unreliability of health cost projections within a 10- would tolerate this result. Instead, the government year horizon, it is natural to be skeptical of 30-year would likely provide additional assistance with out- forecasts. But these uncertainties are no excuse for of-pocket costs to those near the bottom of the ignoring the projections of the Medicare trustees income distribution. But improving the safety net and what they might mean for different groups of would mean even higher tax increases, which seem older Americans. Our estimates would have to turn unrealistic. The current system does not appear to out to be extremely pessimistic in order to make be politically sustainable, since it would take a current policy sustainable. If anything, our high- radical shift in American voters’ attitude toward tax cost assumption is more consistent with the burdens to allow tax increases anywhere close to the historical growth in health care spending than the required levels. intermediate-cost projections that we emphasize in this analysis. Alternative Health Cost In the absence of reform, an economic or political crisis is likely before 2030, regardless of the Projections financial health of the Social Security and Medicare trust funds, which has dominated the policy debate. Even if health care costs grow more slowly than the The crisis will result from pressures on overall Medicare trustees expect, out-of-pocket medical spending in both public and private budgets, not expenses will strain household budgets for older simply because some trust fund empties. Americans over the next quarter century. For example, under our low-cost assumption, in which health care costs per beneficiary grow at an annual rate that is 1 percentage point less than the baseline intermediate case, median out-of-pocket payments will consume one-quarter of after-tax income for Issue in Brief 7 Table 3. Real Median Income and Health Care Spending for Older Married Couples 2000-2030, Alternative Cost Assumptions 2000 2010 2020 2030 Low-Cost Assumptions Payments as a Share of After-Tax Income (%) 16.0 21.5 23.5 25.0 After-Tax Income Net of Health Spending ($) 30,330 32,310 33,960 35,080 Baseline Intermediate Assumptions Payments as a Share of After-Tax Income (%) 16.0 23.8 29.2 35.1 After-Tax Income Net of Health Spending ($) 30,330 31,370 31,450 30,380 High-Cost Assumptions Payments as a Share of After-Tax Income (%) 16.0 26.2 35.5 49.1 After-Tax Income Net of Health Spending ($) 30,330 30,380 28,630 23,820 Table 4. Real Median Income and Health Care Spending for Older Unmarried Adults, 2000-2030, Alternative Cost Assumptions 2000 2010 2020 2030 Low-Cost Assumptions Payments as a Share of After-Tax Income (%) 17.3 21.4 21.6 23.4 After-Tax Income Net of Health Spending ($) 12,700 13,870 15,890 17,640 Baseline Intermediate Assumptions Payments as a Share of After-Tax Income (%) 17.3 23.7 26.2 30.3 After-Tax Income Net of Health Spending ($) 12,700 13,480 14,970 16,070 High-Cost Assumptions Payments as a Share of After-Tax Income (%) 17.3 26.2 32.7 39.7 After-Tax Income Net of Health Spending ($) 12,700 13,030 13,640 13,900 Source: Authors’ estimates. Note: All amounts are computed as the mean value between the 45th and 55th percentiles of the before-tax income distribution, approximately equal to the median value. Values are expressed in constant 2004 dollars. Estimates are restricted to married couples in which at least one spouse is age 65 or older. Income projections come from the Urban Institute’s DYNASIM3 model. Intermediate health care cost projections are based on the intermediate assumptions used by the Medicare trustees, low-cost projections use annual growth rates in per beneficiary spending that are 1 percentage point below the baseline intermediate case, and the high-cost projections use annual growth rates 1 percentage point above the baseline case. 8 Center for Retirement Research Endnotes 19 It may be unrealistic to assume that Congress would ever allow tax rates to rise this high. 1 Butrica, Iams, and Smith (2003); Butrica and Political pressures would likely prevent too many Uccello (2004); and Uccello (2001). taxpayers from drifting into the Alternative Minimum Tax, and neither political party wants 2 Crystal et al. (2000); Goldman and Zissimopoulos all the temporary tax cuts to expire. Instead, a (2003); and Maxwell, Moon, and Segal (2001). broad Congressional consensus exists to retain 3 Medicare also includes two other parts. Part A, cuts focused on the middle and lower income the Hospital Insurance program, provides classes. coverage for hospital and skilled nursing facility 20 We set the payroll tax equal to 7.65 percent of stays and home health care services. It is earnings, the current tax rate for Social Security financed by a 1.45 percent payroll tax on workers and Medicare Part A. Income tax liabilities and their employers. Part C includes managed come from the Urban-Brookings’ Tax Policy care plans that currently provide Part A and Part Center microsimulation model of the U.S. B benefits to enrollees. federal tax system. The estimates assume that the 4 Chollet (2003). only itemized deductions available to the median older taxpayer are from medical expenses, 5 Centers for Medicare and Medicaid Services charitable deductions, and real estate taxes. (2004). Medical expenses come from our projection 6 Medicare Board of Trustees (2004). model, and we set charitable deductions and real estate taxes equal to the average levels among all 7 Chernew, Hirth, and Cutler (2003); and taxpayers with the same approximate level of Reinhardt, Hussey, and Anderson (2004). adjusted gross income, based on Internal 8 Newhouse (1993). Revenue Service data. Our estimated tax 9 Davis and Cooper (2003); and Thorpe, Florence, liabilities do not include state and local taxes, and Joski (2004). which vary by locality. State taxes are also likely to increase over time, because of the growing 10 Medicare Board of Trustees (2004). fiscal burden of Medicaid. 11 Chollet (2003). 21 Income quintiles are based on before-tax 12 Kaiser Family Foundation and Health Research income. Shares are computed as the mean value and Educational Trust (2004). between the 45th and 55th percentiles of the distribution within each quintile. Estimates are 13 These thresholds will be in place in 2006 when restricted to married couples in which at least the program begins. They will rise in later years one spouse is age 65 or older. Income with increases in average drug spending. projections come from the Urban Institute’s 14 The model used in the analysis is called DYNASIM3 model. Health care cost projections DYNASIM3; it is a dynamic microsimulation are based on the intermediate assumptions used model. For more information about DYNASIM3, by the Medicare trustees. see Favreault and Smith (2004). 22 Income quintiles are based on before-tax 15 Medicare Board of Trustees (2004). income. Net income amounts are expressed in constant 2004 dollars and computed as the 16 Authors’ calculations from Kaiser Family mean value between the 45th and 55th percentiles Foundation (2004b). of the distribution within each quintile. 17 Moon, Brennan, and Segal (1998); and Kaiser Estimates are restricted to married adults ages 65 Family Foundation (2004a). and older. Income projections come from the Urban Institute’s DYNASIM3 model. Health 18 CBO (2003). This CBO scenario would raise the care cost projections are based on the tax burden 23 percent over historical levels. intermediate assumptions used by the Medicare trustees. Issue in Brief 9 References Kaiser Family Foundation. 2004a. “Medicare at a Glance.” Washington, D.C.: Henry J. Kaiser Butrica, Barbara A., Howard M. Iams, and Karen E. Family Foundation. Available at http:// Smith. 2003. “It’s All Relative: Understanding www.kff.org/medicare/1066-07.cfm. the Retirement Prospects of Baby Boomers.” Kaiser Family Foundation. 2004b. “State Health Working Paper No. 2003-21. Chestnut Hill, MA: Facts Online.” Available at http:// Center for Retirement Research at Boston www.statehealthfacts.kff.org. College. Kaiser Family Foundation and Health Research and Butrica, Barbara, and Cori Uccello. 2004. “How Educational Trust. 2004. Employer Health Will Boomers Fare at Retirement?” AARP Public Benefits 2004 Annual Survey. Washington, Policy Institute Report No. 2004-05. D.C.: Kaiser Family Foundation and Health Washington, D.C.: AARP. Research and Educational Trust. Available at Centers for Medicare and Medicaid Services. 2004. http://www.kff.org/insurance/7148/index.cfm. “Health Accounts.” Available at http:// Maxwell, Stephanie, Marilyn Moon, and Misha www.cms.hhs.gov/statistics/nhe/default.asp. Segal. 2001. “Growth in Medicare and Out-of- Chernew, Michael E., Richard A. Hirth, and David Pocket Spending: Impact on Vulnerable M. Cutler. 2003. “Increased Spending on Health Beneficiaries.” New York: Commonwealth Fund. Care: How Much Can the United States Afford?” Medicare Board of Trustees. 2004. “2004 Annual Health Affairs 22(4): 15-25. Report of the Boards of Trustees of the Federal Chollet, Deborah. 2003. “The Medigap Market: Hospital Insurance and Federal Supplementary Product and Pricing Trends, 1999-2001.” Medical Insurance Trust Funds.” Washington, Operational Insights No. 11. Washington, D.C.: D.C.: Medicare Board of Trustees. Mathematica Policy Research, Inc. Moon, Marilyn, Niall Brennan, and Misha Segal. Congressional Budget Office. 2003. The Long- 1998. “Options for Aiding Low-Income Term Budget Outlook. Washington, D.C.: Medicare Beneficiaries.” Inquiry 35: 346-356. Congressional Budget Office. Newhouse, Joseph P. 1993. “An Iconoclastic View of Crystal, Stephen, Richard W. Johnson, Jeffrey Cost Containment.” Health Affairs 12 Harman, Usha Sambamoorthi, and Rizie Kumar. (supplement): 153-171. 2000. “Out-of-Pocket Health Care Costs Among Reinhardt, Uwe E., Peter S. Hussey, and Gerard F. Older Americans.” Journal of Gerontology: Anderson. 2004. “U.S. Health Care Spending in Social Sciences 55B (1): S51-S62. an International Context.” Health Affairs 23(3): Davis, Karen, and Barbara S. Cooper. 2003. 10-25. “American Health Care: Why So Costly?” Invited Thorpe, Kenneth E., Curtis S. Florence, and Peter testimony before the Senate Appropriations Joski. 2004. “Which Medical Conditions Subcommittee on Labor Health and Human Account for the Rise in Health Care Spending?” Services, June 11, 2003. Available at http:// Health Affairs Web Exclusive. Available at http:// www.cmwf.org/usr_doc/ content.healthaffairs.org/cgi/content/abstract/ davis_senatecommitteetestimony_654.pdf hlthaff.w4.437 Favreault, Melissa, and Karen Smith. 2004. “A Uccello, Cori E. 2001. “Are Americans Saving Primer on the Dynamic Simulation of Income Enough for Retirement?” Issue in Brief 7. Model (DYNASIM3).” Retirement Project Chestnut Hill, MA: Center for Retirement Discussion Paper No. 02-04. Washington, DC: Research at Boston College. The Urban Institute. Available at http:// www.urban.org/UploadedPDF/ 410961_Dynasim3Primer.pdf. Goldman, Dana P., and Julie M. Zissimopoulos. 2003. “High Out-of-Pocket Health Care Spending by the Elderly.” Health Affairs 22(3): 194-202. 10 Center for Retirement Research CENTER FOR RETIREMENT R E S E A R C H AT B O S T O N C O L L E G E About the Center Affiliated Institutions The Center for Retirement Research at Boston American Enterprise Institute College, part of a consortium that includes parallel The Brookings Institution centers at the University of Michigan and the Center for Strategic and International Studies National Bureau of Economic Research, was Massachusetts Institute of Technology established in 1998 through a grant from the Social Syracuse University Security Administration. The goals of the Center are Urban Institute to promote research on retirement issues, to transmit new findings to the policy community and Contact Information the public, to help train new scholars, and to Center for Retirement Research broaden access to valuable data sources. Through Boston College these initiatives, the Center hopes to forge a strong Fulton Hall 550 link between the academic and policy communities Chestnut Hill, MA 02467-3808 around an issue of critical importance to the Phone: (617) 552-1762 nation’s future. Fax: (617) 552-1750 E-mail: crr@bc.edu Website: http://www.bc.edu/crr All of our publications are available on our website: www.bc.edu/crr © 2004, by Trustees of Boston College, Center for Retirement The research reported herein was supported by the Social Research. All rights reserved. Short sections of text, not to Security Administration. 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