Transcript Source of Health Insurance for Ages 50-64

Health Coverage in Retirement
Presentation at Citizens’ Health Care Working Group
by Gerry Smolka,
Senior Policy Advisor
AARP Public Policy Institute
July 26, 2005
Houston, Texas
Health coverage in retirement
 Central role in facilitating access to
needed services and providing financial
protections
 Issues for early retirees
 Issues for retirees eligible for Medicare
Importance of health coverage in
later years
 Health care needs (service use) increase
with age, on average
 Ability to absorb and recover from the
financial costs associated with major
health care needs is constrained for nonworkers
Source of health insurance for ages 50-64 in
2003
Uninsured, 13%
CHAMPUS, VA
or military, 2%
Medicare, 3%
Medicaid, 5%
Other Private, 7%
EmployerProvided, Private,
70%
Source: AARP Public Policy Institute analysis of the Current Population Survey, March 2004
Supplement.
Millions
Number of persons age 50-64 with no health
insurance is increasing
7
6
5
4
3
2
1
0
5.6
6.1
6.4
3.9
1989
1999
2002
2003
Source: AARP PPI analysis of Current Population Survey, March 1990, 2000,
2003, 2004
Early retirees are different from other 50-64
year olds in how they get coverage in 2003
Retired
Source of Insurance*
Employer coverage:
In Own Name
58%
38%
As a Dependent
Other Private
Public**
Uninsured
20%
12%
14%
16%
Not
Retired
71%
55%
17%
6%
9%
13%
* This is the primary source of insurance. Some people may have coverage from multiple sources.
** Includes Medicare, Medicaid, and VA or TriCare coverage.
Note: Columns may not total 100% due to rounding.
Source: AARP PPI analysis of Current Population Survey, March 2004.
All
70%
53%
17%
7%
10%
13%
Issues for early retirees
 Unless disabled, not generally eligible for public
coverage, even if have low-income
 Individual insurance market can be particularly
difficult for this age group to access and afford
- More likely to have existing health problem which
could prevent them from getting coverage or could
result in inadequate coverage
- Rating practices may put cost of coverage beyond
their means (premiums can look like mortgage
payments)
2005 monthly premium in Texas high-risk pool in
the Houston area for male non-smokers
Deductible
Age 55
Age 62
$500
$994
$1435
$1000
$729
$1057
$2500
$491
$713
$5000
$395
$572
Source: www.txhealthpool.org, July 20, 2005
Issues for early retirees
 Early retirees fortunate enough to have retiree
health benefits may also face challenges
- Premium contribution and cost-sharing take a growing
bite from their pension
Between 2003 and 2004, the Kaiser/Hewitt survey of large
private employers’ retiree health benefits showed:
• 79% increased retiree premium contributions
• 68% increased dependent premium contributions
• 45% increased co-insurance/co-payments
- Employer may stop offering coverage
Percentage of persons age 50-64 who are
retired, 1995 and 2003
60%
50%
40%
30%
1995
2003
20%
10%
0%
50-64
50-59
60
61
62
63
64
Age
Source: AARP PPI analysis of Current Population Survey, March, 1996
and 2004.
Number of early retirees has been
decreasing in recent years
 2002 AARP survey of workers age 45+ found
that 69% said they want to work beyond usual
retirement age
 76% of these respondents stated a major reason
they continue to work is because they need the
money
 65% of these respondents also stated a key
reason they continue to work is to maintain their
health insurance
Issues for Medicare-eligible retirees
 Because of Medicare, the number of uninsured
adults age 65 and over is less than 1%
 Retiree benefits to supplement Medicare are
valued because Medicare only pays about half
of health care expenses of older adults
- These benefits provide help with Medicare costsharing and costs not covered by Medicare (e.g.
drugs, dental)
Out-of-pocket spending on health care depending
on source of supplemental coverage for 65+
Medicare beneficiaries, 2003
Any Medicaid
17%
Private Medicare Plans
17%
Employer-sponsored
17%
32%
Medigap
27%
Other Public Plans
23%
Medicare Only
0%
5%
10%
15%
20%
25%
30%
35%
Out-of-pocket health care spending as a percent of income
Source: AARP PPI analysis using the Medicare Benefits Model, V.5.306
Issues for Medicare-eligible retirees
 Retirees being asked by employers to
absorb health care cost increases
(premiums, cost-sharing)
 Medicare premiums rising
 Some find they can no longer afford their
retiree health benefit
 Future retirees are less likely to have
health benefits
Issues for older adults
 Surveys show that concern about the cost of
health care is seen as a major challenge facing
people older than age 55
- Ranks second to concern about financial security after
retirement
Estimated retiree health savings need
is high, even without LTC
Age at
Time of
Death
Medigap +
+ $500
+ $2850
Parts B & D Out-of-pocket Out-of-pocket
Drug
Drug
80
$58,000
$66,000
$114,000
85
$82,000
$95,000
$169,000
90
$110,000
$129,000
$235,000
95
$142,000
$168,000
$315,000
100
$179,000
$213,000
$411,000
Savings needed for Medigap coverage at Age 65 in 2004 at 7% health inflation.
Source: EBRI presentation to AARP, Fall 2004
Issues for older adults
 Access to health care and benefits in their later
years is an economic and emotional issue for
older adults
 Individuals are no better prepared to absorb
rising health costs than are employers and
governments
Issues for older adults
All individuals, including older adults, could
be helped when the country finds ways to:
 Address the problem of rising health care costs,
and
 Assure universal access to health coverage