Doing the Math: The Cost of Medicare

There has been much discussion of late in the context of the deficit-reduction debate of Medicare beneficiaries’ “skin in the game.” The term “skin in the game” refers to how much people with Medicare pay out of pocket for coverage. Some believe that Medicare beneficiaries pay too little for care and overutilize care, and that if they paid more—that is, if they had more “skin in the game”—they would use less care generally. However, what many don’t realize is how much beneficiaries already pay for coverage. People with Medicare live on limited incomes—half have incomes lower than $22,000 per year—and on average spend 15 percent of their income on health care.

To help raise awareness of how much people with Medicare pay out of pocket, the Medicare Rights Center has developed a fact sheet titled, “Doing the Math: The Cost of Medicare.” The fact sheet reveals that a relatively healthy Medicare beneficiary with a Medigap plan already pays over $5,000 per year in premiums and deductibles alone. This does not include the cost of drugs at the pharmacy, costs associated with hospital stays, or out-of-pocket costs associated with services that Medicare does not pay for, such as vision, dental and hearing care.

As a result of the cost burden people with Medicare already face, proposals that shift greater costs to beneficiaries—by, for example, increasing copayments and limiting coverage under supplemental insurance plans like Medigap—may cause them to delay not only unnecessary but necessary care, putting their health and quality of life at risk.

Read “Doing the Math: The Cost of Medicare.”