One out of every five elderly Americans faces each day on a limited income with little flexibility for extra or unexpected medical expenses. When medical care is needed, these 6 million poor and near-poor elderly Americans depend on Medicare for assistance with their medical bills. The universal coverage of Medicare assures them entry to America's health care system and offers protection from financial catastrophe when illness strikes. However, gaps in the scope of Medicare's benefits and financial obligations for coverage can result in onerous financial burdens.
Low-income elderly people are particularly vulnerable because they are more likely to be experiencing health problems that require medical services than those who are economically better off, but are less able to afford needed care because of their lower incomes. Even routine care, such as physician visits or prescription drugs, can require older and poorer beneficiaries to make hard choices between basic necessities and needed health care services. Medicaid serves as an important complement to Medicare by assisting low-income Medicare beneficiaries with their Medicare premiums and cost-sharing and by providing coverage for prescription drugs and long-term care (LTC) services that are not available through Medicare. Without Medicaid's assistance, the costs of basic medical care can impede access to care and erode financial security for low-income elderly people.
This article profiles the economic and health status of the low-income elderly population served by Medicare, assesses the impact of Medicare, and examines the role Medicaid plays as a supplement to Medicare. Particular emphasis is given to the burdens medical expenses impose on low-income elderly people, the extent to which coverage to supplement Medicare can assist in alleviating the impact of financial burdens on access to care, and the implications of potential changes in the scope and structure of Medicare and Medicaid for the elderly low-income population.
Poverty and Illness in the Elderly Population
Despite general improvements in the economic situation of the elderly population over the last 3 decades, many elderly Americans continue to struggle to pay living expenses on low or modest incomes. Forty-one percent of the Nation's 31 million elderly people living in the community have incomes below twice the Federal poverty level (FPL) and 1 in 5 are poor or near-poor (U.S. Bureau of the Census, 1996).
In 1994, the FPL was $7,100 per year in income for a single elderly adult and $9,000 for an elderly couple. Twelve percent of the elderly population—3.7 million people— had incomes below the poverty level and another 7 percent—2.2 million people— were near-poor with incomes between 100 and 125 percent of FPL (Figure 1).1 Together, these 5.9 million poor and near-poor people comprise Medicare's non-institutionalized low-income elderly population. Another 1.4 million elderly reside in nursing homes and receive assistance from Medicaid (Lyons, Rowland, and Hanson, 1996).
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