Nearly 50% of Medicare Patients are Unable to Afford a Single Hospital Stay

Americans who depend on Medicare to cover hospital stays often struggle to afford the standard deductible, leading to financial strain.

Research conducted at the University of Pennsylvania Perelman School of Medicine revealed that nearly half of these patients lack the necessary funds to cover the $1,600 payment, which is the standard out-of-pocket cost.

However, the financial strain isn’t restricted to just the poorest Americans. The researchers noted, “Many Medicare beneficiaries with modest incomes are at risk of financial hardship from the costs associated with a single hospital stay.”

“Nationally, 36 percent of beneficiaries face challenges in paying medical bills or delay seeking care due to financial concerns, especially those with multiple chronic conditions and serious illnesses who are particularly susceptible to high out-of-pocket expenses and economic distress,” they emphasized.

Medicaid Coverage and Income Requirements

While Medicaid and private supplemental insurance can alleviate some of these costs, qualifying for such assistance often necessitates demonstrating extreme financial hardship.

Patients must prove that their income falls below or at the federal poverty level—currently set at $15,060 for individuals and $20,440 for couples in 2024. There are also asset restrictions of $2,000 for individuals and $3,000 for couples.

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Some states have set higher thresholds, expanding Medicaid eligibility to 138 percent of the federal poverty level.

Moreover, access to comprehensive Medicaid benefits, including long-term care, is contingent upon income thresholds that vary by state—typically ranging from 75 to 100 percent of the federal poverty level.

The conclusions drawn in this study are based on an examination of the Health and Retirement Study of 2018, the largest social science and behavioral research initiative in the US focused on aging individuals. The study, initiated in 1992 by academic researchers and government social scientists, has influenced numerous scholarly articles, books, and congressional reports.

Out of the 4,881 beneficiaries analyzed in the Medicare study, 45 percent did not have adequate funds in their checking and savings accounts to cover the Medicare hospital deductible.

The primary source of funding for this study was the National Institute of Aging.

Multiple Challenges for Seniors

Serious health issues pose numerous challenges for seniors beyond medical expenses, as noted by Helen Levy, associate professor at the University of Michigan’s Institute for Social Research. Levy’s research identifies three main factors contributing to a diminished quality of life for seniors: reduced income, increased medical costs, and the direct impact of health symptoms.

Potential Solutions

Dr. Chad Savage, an internal medicine physician, highlighted the key question raised by this study regarding how to address this issue. “One common response is to expand insurance coverage or government programs to encompass a broader array of medical costs,” mentioned Savage, a member of Samaritan Ministries Inc., a group where members pool resources to cover medical expenses.

“However, this approach could escalate coverage costs, leading to a larger chunk of patients’ limited resources going towards taxes and insurance premiums, ultimately depriving them of funds that could have been used for direct medical expenses,” he elaborated.

“The real concern, however, is why so many Americans are unprepared for medical expenses when they inevitably arise,” Savage added. “A legislative solution could involve incentivizing proactive savings for medical expenses that are bound to occur during one’s lifetime.”

“By offering incentives for contributions to Health Savings Accounts (HSAs) or Medical Savings Accounts (MSAs), Americans could gradually accumulate funds to cover out-of-pocket expenses for their healthcare needs when necessary,” he suggested.