Study: Many Medicare Beneficiaries Couldn’t Afford a Hospital Stay

A study of Medicare beneficiaries with modest incomes found that up to half of them may not have sufficient funds to cover out-of-pocket costs associated with a single hospital stay. 

This financial precarity was more prevalent among Black and Hispanic beneficiaries, beneficiaries with lower levels of education, and those with multiple chronic conditions. The findings are published in Annals of Internal Medicine.

Researchers from the University of Pennsylvania Perelman School of Medicine used data from the 2018 wave of the Health and Retirement Study (HRS) to identify Medicare-enrolled respondents who would face financial precarity if exposed to the Medicare Part A hospital deductible of $1,600. 

The researchers focused on respondents making greater than 100% to 400% or less of the federal poverty level, or the so-called “economic middle” of Medicare recipients. This group includes people who earn too much to qualify for Medicaid but still may qualify for financial assistance in other programs. Financial precarity was defined as having insufficient funds to pay the Medicare hospital deductible and examined across four scenarios that considered checking and savings account balances, total liquid assets (with a reserve for future living costs), and supplemental insurance. 

The researchers found that between 34.6% and 50.7% of the beneficiaries studied would face financial precarity if hospitalized because they would not have sufficient resources or supplemental insurance to cover associated out-of-pocket costs. 

While the prevalence of financial precarity varied by scenario, the proportion of beneficiaries who could not pay their hospital bill across all four scenarios exceeded 30 percent.

Considering that just one hospitalization could deplete the financial resources of a large proportion of Medicare beneficiaries, these findings suggest a need to broaden financial protections for those with moderate incomes and limited assets.