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Medical Costs Often Exceed Assets Late in Life
How expensive has medical care gotten? Very. About 25% of all seniors spend more than the total value of all their assets on out-of-pocket medical expenses during the last five years of their life. This rises to 42% of all seniors if you don't include the value of their house.
It's a far cry from the days when doctors would accept fish as payment from their poorer patients.
Amy Kelley, the lead author of a Mount Sinai study on out-of-pocket medical expenses near the end of life says: "I think a lot of people will be surprised by how high these out-of-pocket costs are in the last years of life."
Medicare covers roughly 80% of most medical costs. But it doesn't cover co-payments, deductibles, most homecare services or non-rehabilitative nursing home care. Imagine what the study would have found if Medicare did not exist.
The study looked at information from the Health and Retirement Study, a semi-annual survey of 26,000 Americans over the age of 50. It examined the 2002-2008 records of 3,209 Medicare recipients during the last five years of their life and compared their out-of-pocket medical expenses to their assets. The average yearly out-of-pocket medical expenses were $38,688 for individuals and $51,030 for couples in which one spouse died. These are not total medical expenses. They're how much people had to pay for medical care out of their own pockets.
The study authors offer no recommendations on how to correct this situation. According to Dr. Kelley, "Prior to this study there was not a lot of data on the extent of out-of-pocket spending. This information can serve as an important tool to help individuals set realistic expectations for end-of-life health care costs, and for government officials to use in discussing Medicare policies."
When Medicare was signed into law in 1965, President Lyndon Johnson spoke of its financial benefits to the elderly: "No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime."
A fine sentiment that's no longer true.
An article on the study was published online by the Journal of General Internal Medicine and will also appear in a future print issue of the journal.
Amy Kelley, MD, MSHS, is an assistant professor of geriatrics and palliative medicine at the Mount Sinai School of Medicine in New York.
September 18, 2012