New research about out-of-pocket expenses for Medicare recipients in the United States suggests that health professionals and policymakers need a better understanding of the financial toll that some chronic diseases have on the elderly.
"Interventions to promote more cost efficient healthcare services and consumer choices can help older adults better cope with these expensive long-lasting conditions and reduce the overall burden of noncommunicable diseases," writes the study's author Joelle Fong, who is an Assistant Professor at the Lee Kuan Yew School of Public Policy.
The study, Out-of-pocket health spending among Medicare beneficiaries: Which chronic diseases are most costly?found that major chronic health conditions can impose significant out-of-pocket (OOP) expenses for recipients of the US government's insurance scheme for older Americans. For some illnesses, the costs are up to 30% higher than for other conditions.
Medicare provides health coverage for 58 million Americans, most of them aged 65 or older. The programme has received significant attention in this year's US electoral cycle, as most Democratic candidates wanted to expand the programme to cover more people, although the presumptive nominee Joe Biden wants to drop the age requirement to 60.
Under Medicare, hospital coverage is free (although there is a deductible) but there is a premium for coverage of doctor's visits and outpatient services. The premium is adjusted according to income, with wealthier Americans paying more.
Medicare typically pays for 80% of approved medical costs or for 60 days of hospital care. This means that there can be significant out-of-pocket expenses. Many seniors buy supplemental insurance as a result. Among the study's sample group, 45% had some form of private health insurance plan and 15% had private long-term care insurance.
Chronic diseases have a huge impact on older Americans, and they're becoming more common among younger Americans too. As many as two-thirds of Americans over 65 have more than one chronic illness, according to the Centres for Disease Control.
THE COST BREAKDOWN
Within the sample group, 37% had cardiovascular disease (CVD), 21% had cancer, 26% had diabetes, 69% had hypertension, and 70% had arthritis. Smaller proportions had chronic lung disease (12%) or a major psychiatric problem (19%). About two-fifths of respondents (36%) did not have any of the ‘big four’ NCDs (CVD, cancer, diabetes, or chronic lung disease).
The research found that CVD, diabetes, hypertension and cancer resulted in much higher adjusted out-of-pocket spending among older adults than other conditions. For Medicare beneficiaries, cardiovascular disease is the most expensive, leading to an excess out-of-pocket spending of $317 per year.
This was followed by diabetes ($237), hypertension ($150), and cancer ($144). For CVD, diabetes and hypertension, most of the additional expense went to prescription drugs. Non-inpatient services spending made up the bulk of increased spending among cancer patients. In total, out-of-pocket expenses for these conditions varied from 12.4% to 30.5% in excess of other illnesses.
While those numbers might not seem huge, it’s worth noting that these are conditions that don’t go away, so those expenses are compounded year after year. In fact, numerous studies have highlighted that the costs of chronic illnesses - together with lost income - can result in severe financial hardship.
PRESCRIPTION FOR SAVINGS
The news isn’t all bad, though. Armed with better knowledge of the possible financial impact of chronic illnesses, healthcare workers and policy makers can act to reduce those expenses.
“For instance, lowering pharmaceutical costs for diabetes through volume purchasing or provider incentives. Value-based insurance design plans, which align individuals’ OOP costs with the value of the health services they receive, can also promote more cost efficient healthcare services and consumer choices,” writes Prof Fong.
Prof Fong also argues that the costs are a good argument for strengthening early detection and timely treatment, because swift intervention “can reduce the need for more expensive treatment and excessive OOP spending downstream.”