Turning 65 Brings Big Health Care Cost Savings, Study Finds

September 15, 2021
Steven Reinberg

When Americans are eligible for Medicare at age 65, they see a significant drop in their out-of-pocket medical costs.

Lowering the eligibility age would save even more, especially for people with the highest out-of-pocket costs, according to a new study.

"Medicare really improves financial risk protection for older adults, and reducing the age of Medicare eligibility would go a long way in reducing the financial burden of health care spending for those who are not quite 65," said lead author Dr. John Scott. He is an assistant professor of cardiac surgery at the University of Michigan Medical School, in Ann Arbor.

For the study, Scott's team looked at out-of-pocket health care costs for people between their late 50s and early 70s, including co-pays, deductibles and costs not covered by insurance.

The average out-of-pocket amount dropped 27% from age 64 to 66, even as incomes stayed about the same, and average health costs paid by insurance and individuals rose 5%, the study found.

And the percentage of older adults without health insurance went from 5% at age 64 to nearly none at 66.

The researchers took special notice of older adults whose health costs ate up more than 40% of their income after food and housing. Nearly 9% of uninsured 64-year-olds fell into this group. By age 66, the percentage had dropped by 35%, the findings showed.

The lack of Medicare benefits for some types of care -- including dental, vision and hearing -- may have contributed to the fact that nearly 6% of 66-year-olds still spent more than 40% of their disposable income on health costs. Some of this could also reflect costs for those who chose traditional Medicare and didn't buy a Medigap plan, the study authors said.

"The financial burden of paying for health care -- sometimes referred to as 'financial toxicity' -- is high for older adults in their 60s," Scott said in a university news release. "With the rise in high-deductible commercial health insurance plans, simply having health insurance is not enough to protect patients from high out-of-pocket health care costs."

When researchers compared the years before Medicare eligibility to those after it, the percentage who said they had delayed care because of cost dropped 17%.

"Unaffordable care isn't just bad for someone's wallet, it's bad for their health," Scott said.

The findings were published online Sept. 10 in JAMA Health Forum.

More information

For more on health care costs, visit the Kaiser Family Foundation.

SOURCE: University of Michigan, news release, Sept. 13, 2021

Aging: Misc.Economic Status Health Costs Insurance: Lack Of Insurance: Medicare Insurance: Misc.Seniors