Financial Issues Drive Health Care Choices for Many Older Adults

Older adults and their families face many financial issues in acquiring treatments and resources to support health. Financial resources can be quickly drained by paying for multiple prescriptions for chronic conditions (Center on an Aging Society, 2002Merck Institute, 2002), inadequate reimbursement for mental health services (Merck Institute), and the lost work time and productivity of unpaid family caregivers (Kassner & Bectel, 1998U.S. Bureau of the Census, 1996).

The expense of paying for multiple prescriptions, which are not reimbursed by Medicare, is a well-known political health issue that is regularly addressed, with great publicity, by Congress, and, with less publicity, dropped from the legislative agenda. For elderly individuals, the cost of medications is a critical financial problem that never goes away. Many older adults have several chronic conditions that require costly prescription drugs to manage symptoms. For example, the average annual drug expenditure for diabetes is $1379, for heart disease, $1187, and for hypertension, $1021. The average annual out-of-pocket prescription drug expenditure for Medicare beneficiaries is $581, because many individuals buy supplementary insurance to help pay for drugs. Low income older adults who qualify for Medicaid may be more fortunate because Medicaid programs cover 60% of drug costs, though many states are planning to reduce or restrict their Medicaid drug benefits in 2003. Not surprisingly, nearly 20% of adults over age 65 report that they have taken less medication than prescribed in the past two years. Others have reported that they sometimes do not fill prescriptions, skip doses to make medication last longer, or spend less on food and heat so they can afford medicine (Center on an Aging Society, 2002).

Older adults visit physicians more often than younger adults do, averaging 15 physician visits per year for adults aged 85 and older compared to 7.2 visits for adults aged 45 to 64 (Merck Institute, 2002). Most office visits for health care require only a small co-payment for Medicare beneficiaries. In contrast, older adults are not frequent users of mental health services, accounting for only 7% to 9% of mental health utilization in hospital, community, and private practice settings. This underuse of mental health services may be due to lack of education among primary care health care providers in geriatric mental health assessment. However, another likely cause is the lower reimbursement by Medicare for mental health conditions, compared to reimbursement for physical conditions. Thus, the high rates of untreated mental health problems among older adults (only 50% of older adults with acknowledged mental problems receive treatment from any provider and only 3% of those see a specialty mental health provider) may be due to the inability to pay Medicare’s 50% co-payment for mental health outpatient services (compared to 20% for general medical services) (Merck Institute).

As adults age, some need help only with daily activities, such as cleaning, cooking, or personal care, in order to remain in their own homes. Unfortunately, Medicare does not reimburse for this type of care, so older individuals who need this “custodial” help must pay for it out-of-pocket or rely on unpaid caregivers, often family members or other support persons. Though some older adults may qualify for subsidized community programs, 70% of people over age 65 who need help with daily activities are cared for by unpaid caregivers, primarily spouses (24%) or daughters (20%) (Kassner & Bectel, 1998). This does not include the many families that are actively engaged in remote family caregiving through phone, visit and email supports. The number of family caregivers available to care for older adults is steadily decreasing in the US. In 1950, the “parent-support ratio” (the number of persons 85 years or older per 100 persons aged 50 to 64) was three. By 1993 this ratio had tripled to 10. By 2050 it is projected to triple again to 29 (U.S. Bureau of the Census, 1996).

The health care system must demonstrate far more focused interest in the family and “like family” (non-kin caregivers) as health care clients, because these caregivers provide the primary social, financial, and physical support for older Americans. As such, the family and “like family” caregivers are a major resource for American society, saving the health care system many dollars, perhaps as much as $196 billion per year (Rosalynn Carter Institute, 2002). On the other hand, this reliance on unpaid caregivers incurs costs to American society in lost productivity when caregivers cannot work. One study estimated that the lost productivity due to caregiving costs U.S. businesses $11 to $29 billion annually (Metlife Institute, 1999). If home and community-based long-term care of older adults continues to be primarily delivered by informal caregivers, they deserve to be the focus of attention for researchers so support systems can be designed that meet their needs, and their lost productivity can be recognized and, perhaps, mitigated.

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