Survey Finds Medicare Members Spend More on Healthcare Than Non-Medicare Members

The healthcare spending amount for Medicare households compared to non-Medicare households is about double, according to a recent KFF analysis.

Based on data from the 2021 Consumer Expenditure Survey, the analysis looked at spending between Medicare members and non-members from an annual dollar amount and as a share of total household spending.

According to KFF, there are roughly 65 million adults covered by Medicare. This includes 57 million adults ages 65 and older, and nearly 8 million adults under age 65 with disabilities.

Though most Medicare members have reported feeling overall positive about its benefits, costs can still be an issue.

Medicare beneficiaries contribute to their plans through monthly premium payments, deductibles, and other cost-sharing requirements, as well as additional expenses for Medicare Part D drug coverage, Medicare Advantage coverage and supplemental insurance.

In addition, there is no limit on out-of-pocket costs for traditional Medicare, which beneficiaries often have out-of-pocket costs for services not covered under traditional Medicare, such as dental, hearing, and vision services.

Results from the Expenditure Survey revealed the healthcare spending burden was double the amount for Medicare households than non-Medicare households in 2021. Though non-members had higher costs for other necessities.

In fact, Medicare households spent an average of $6,557 on healthcare, accounting for 15% of their total household spending ($44,686), while non-Medicare households spent $4,598 on their healthcare, accounting for 7% of their total household spending ($67,769).

The survey found Medicare households spend an average of $16,408 on housing, $6,606 on food, $5,752 on transportation, and $9,363 on other expenses.

Non-Medicare households spent an average of $22,426 on housing, $10,281 on food, $11,630 on transportation, and $18,834 on other expenses.

Lower average total household spending for Medicare households compared to non-Medicare households and higher healthcare use also accounts for higher healthcare spending by Medicare households.

It was found in another KFF analysis that Medicare benefit payments rose to $829 billion in 2021 from $541 billion in 2011. Spending on Part B services accounted for the largest share of Medicare benefit spending by 48% in the same year.

The same analysis projected Medicare spending to rise from 10% of total federal spending in 2021 to 18% in 2032, and from 3.1% to 3.9% of gross domestic product value in the same period because of growing enrollment, increased use of services and intensity of care, and rising healthcare costs.

However, policies like the Inflation Reduction Act of 2022, which is working to lower prescription drug costs for Medicare members’ out-of-pocket spending under the Part D benefit; has a limit on insulin cost for $35 a month, and expanded eligibility for full Part D Low-Income Subsidies, are just one initiative to combat overall spending.

Policy makers have also considered expanding income eligibility thresholds for Medicare Savings Programs so more people qualify for financial support and an out-of-pocket cap on cost sharing for benefits covered under traditional Medicare could be added. KFF claimed adopting these changes would require additional federal spending, though.

Some supporting data of the survey was limited as it did not include the cost burden for households with long-term care facility costs.

Additionally, Health spending data for 2021 for both Medicare and non-Medicare households may have been lower than what would have been expected due to the COVID-19 pandemic, the analysis noted.