A key objective of the Medicare program is to reduce risk of financial catastrophe due to out-of-pocket healthcare expenditures. Yet little is known about cumulative financial risks arising from out-of-pocket healthcare expenditures faced by older adults, particularly near the end of life.
Using the nationally representative Health and Retirement Study (HRS) cohort, we conducted retrospective analyses of Medicare beneficiaries’ total out-of-pocket healthcare expenditures over the last 5 years of life.
We identified HRS decedents between 2002 and 2008; defined a 5 year study period using each subject’s date of death; and excluded those without Medicare coverage at the beginning of this period (n = 3,209).
We examined total out-of-pocket healthcare expenditures in the last 5 years of life and expenditures as a percentage of baseline household assets. We then stratified results by marital status and cause of death. All measurements were adjusted for inflation to 2008 US dollars.
Average out-of-pocket expenditures in the 5 years prior to death were $38,688 (95 % Confidence Interval $36,868, $40,508) for individuals, and $51,030 (95 % CI $47,649, $54,412) for couples in which one spouse dies. Spending was highly skewed, with the median and 90th percentile equal to $22,885 and $89,106, respectively, for individuals, and $39,759 and $94,823, respectively, for couples. Overall, 25 % of subjects’ expenditures exceeded baseline total household assets, and 43 % of subjects’ spending surpassed their non-housing assets. Among those survived by a spouse, 10 % exceeded total baseline assets and 24 % exceeded non-housing assets. By cause of death, average spending ranged from $31,069 for gastrointestinal disease to $66,155 for Alzheimer’s disease.
Despite Medicare coverage, elderly households face considerable financial risk from out-of-pocket healthcare expenses at the end of life. Disease-related differences in this risk complicate efforts to anticipate or plan for health-related expenditures in the last 5 years of life.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
Tax calculation will be finalised during checkout.
Beschloss M. Our Documents: 100 Milestone Documents from the National Archives. New York, NY: Oxford University Press; 2006.
French E, Jones JB. On the distribution and dynamics of health care costs. J Appl Econometrics. 2004;19(6):705–21.
De Nardi M, French E, Jones JB. Why do the elderly save? The role of medical expenses. J Polit Econ. 2010;118(1):39–75.
Baicker K, Goldman D. Patient cost-sharing and health care spending growth. J Econ Perspect. 2011;25(2):47–68.
Marshall S, McGarry K, Skinner J. The risk of out-of-pocket health care expenditures at the end of life. In: Explorations in the Economics of Aging. Chicago, IL: University of Chicago Press; 2011.
Health and Retirement Study. http://hrsonline.isr.umich.edu/ Accessed July 31, 2012.
Goldman DP, Zissimopoulos J, Lu Y. Medical Expenditure Measures in the Health and Retirement Study. Forum for Health Economics & Policy. 2011;14:3.
Venti S. Economic Measurement in the Health and Retirement Study. Report to the Data Monitoring Committee, Health and Retirement Study; National Institute on Aging; January, 2011.
Marshall S, McGarry KM, Skinner JS. The Risk of Out-of-Pocket Health Care Expenditure at End of Life. National Bureau of Economic Research, Working Paper 16170. July 2010.
Medicare Current Beneficiaries Study: Details for Section: 1998 Characteristics and Perceptions of the Medicare Population. https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/MCBS/Data-Tables-Items/CMS1253269.html. Accessed July 31, 2012.
Patient Protection and Affordable Care Act. http://www.dol.gov/ebsa/healthreform/. Accessed July 31, 2012.
Title VIII. Community Living Assistance Services and Supports Act (CLASS act) | The White House http://www.whitehouse.gov/health-care-meeting/proposal/titleviii. Accessed July 31, 2012.
Paul Ryan: The GOP path to prosperity - WSJ.com http://online.wsj.com/article/SB10001424052748703806304576242612172357504.html. Published April 5, 2011. July 31, 2012.
Ryan’s Medicare voucher plan draws democrat opposition - AARP Bulletin. http://www.aarp.org/health/medicare-insurance/info-06-2011/paul-ryan-medicare-voucher-plan.html. Accessed July 31, 2012.
Anderson RA, Hsieh PC, Su HF. Resource allocation and resident outcomes in nursing homes: Comparisons between the best and worst. Res Nurs Health. 1998;21(4):297.
Castle NG, Engberg J. The influence of staffing characteristics on quality of care in nursing homes. Health Serv Res. 2007;42(5):1822–47.
Castle NG, Anderson RA. Caregiver staffing in nursing homes and their influence on quality of care: Using dynamic panel estimation methods. Med Care. 2011;49(6):545–52.
McCorkle R, Strumpf NE, Nuamah IF, et al. A specialized home care intervention improves survival among older post-surgical cancer patients. J Am Geriatr Soc. 2000.
McGarry K. Does Caregiving Affect Work? Evidence Based on Prior Labor Force Experience. In: Wise D, ed. Health Care Issues in the United States and Japan. Chicago, IL: University of Chicago Press.
McGarry K, McGarry K. Medicare gaps and widow poverty. Soc Sec Bull. 2005;66:58.
McGarry K, Schoeni RF. Widow Poverty and Out-of-Pocket Medical Expenditures Near the End of Life. The Journals of Gerontology Series B: Psychological Sciences and Social Sciences. 2005;60(3):S160.
Amy Kelley receives support from the Hartford Foundation, Hartford Center of Excellence Scholars Award and the Claude D. Pepper Older Americans Independence Center at Mount Sinai (NIA-1P30AG28741-01). Sean Fahle is supported by (1 T32-AG033533). Jonathan Skinner is supported National Institute on Aging (PO1-AG19783). Funders did not have any role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; and preparation, review, or approval of the manuscript. Amy Kelley and Qingling Du had access to all the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.
Conflict of Interest
Jonathan Skinner lists several financial interests on his disclosure form, none of which he believes represents a conflict for this manuscript. The other authors have no conflicts of interest.
About this article
Cite this article
Kelley, A.S., McGarry, K., Fahle, S. et al. Out-of-Pocket Spending in the Last Five Years of Life. J GEN INTERN MED 28, 304–309 (2013). https://doi.org/10.1007/s11606-012-2199-x
- out-of-pocket spending
- healthcare expenses