Consumer / Employer, Payers

Healthcare Spending Burden Is Higher for Medicare Households than Non-Medicare Households

On average, Medicare households spent 15% of their total spending on health-related expenses in 2021, versus 7% for non-Medicare households, according to a new KFF report.

Medicare households, in which all of the household members are covered by Medicare, spend significantly more on healthcare than non-Medicare households, in which none of the household members are covered by Medicare, according to a new analysis

The KFF report, released Wednesday, relied on data from the Bureau of Labor Statistics’ 2021 Consumer Expenditure Survey. This survey includes data on expenditures, income and demographic characteristics of people in the U.S.

On average, Medicare households spent 15% of their total spending on health-related expenses in 2021, versus 7% for non-Medicare households, KFF found. Medicare households’ total annual spending was $44,686, and $6,557 of that was on healthcare. Non-Medicare households’ total annual spending was $67,769 on average, and $4,598 was on healthcare. Healthcare expenses include insurance premiums, medical services, prescription drugs and medical supplies, according to KFF.

“The larger burden of health care spending among Medicare households than non-Medicare households is a function of both lower average total household spending for Medicare households than non-Medicare households and higher health care use, which results in higher health care spending by Medicare households,” the researchers said.

About one in three Medicare households spent at least 20% of their total household spending on healthcare expenses in 2021. This is significantly more than non-Medicare households, in which one in 14 spent at least 20% of their total household spending on healthcare expenses. Additionally, three in four Medicare households spent 10% of their total household spending on healthcare, versus a quarter of non-Medicare households.

Additional expenses included in consumers’ total spending amounts were housing, food and transportation. For Medicare households, 37% of total spending was on housing, 15% was on food, 13% was on transportation and 21% was on other expenses (like education and clothing). For non-Medicare households, 33% of total spending was on housing, 15% was on food, 17% was on transportation and 28% was on other expenses.

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KFF noted that there are some shortcomings with the data.

“Health spending data for 2021 for both Medicare and non-Medicare households might be lower than what would otherwise have been expected absent the Covid-19 pandemic, since utilization and spending fell sharply in 2020 due to the pandemic and continued at lower-than-expected levels in 2021,” the researchers said. “Additionally, the analysis underestimates the health care spending burden for households that incur long-term care facility costs because the Consumer Expenditure Survey does not include people who reside in facilities.”

KFF added that “with health care use increasing with age and income falling as people retire, it’s not unexpected that health care is a bigger cost burden for Medicare households.” However, there are some “implications for policy debates, including the level of cost-sharing and premiums in Medicare,” the researchers added.

Photo: Mbve7642, Getty Images

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