Medical Care Economic Risk Measuring Financial Vulnerability from Spending on Medical Care (2012) / Chapter Skim
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5 Issues in Defining Resources
5 Issues in Defining Resources
Pages 175-190
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From page 175... ...
The financial burden of medical care among the elderly transition ing to long-term care INCORPORATING DATA ON ASSETS INTO MEASURES OF FINANCIAL BURDENS FOR HEALTH: IMPLICATIONS FOR THE ELDERLY, THE NONELDERLY, AND THE SELF-EMPLOYED Jessica Banthin (Congressional Budget Office) provided an overview of the background paper she and Didem Bernard prepared for the workshop (see Part III of this volume)
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From page 176... ...
First, how is a reasonable cutoff point or threshold defined for both the elderly and the nonelderly populations that would indicate high medical care risk or high burden? Second, how does one incorporate the accumulated savings of retired families into the measure of resources available for financing health care expenditures?
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From page 177... ...
At the 75th percentile, the elderly are spending almost 21 percent of family income on out-of-pocket medical care, compared with 7 percent of family income for the nonelderly. As one would expect, examining the distribution of total net assets by family age groups, at the overall median elderly individuals reported $146,000 in family net wealth, and nonelderly individuals reported $20,000.
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From page 178... ...
Overall, about 52 percent of elderly and 17 percent of nonelderly individuals have high burdens according to this threshold. Using the 10 percent of family income cutoff would more than triple the number of elderly having high burdens, and this persists across different poverty status groups.
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From page 179... ...
, with overall charge of the income and asset sections. After a brief background on HRS, Hurd explained how the survey assesses out-of-pocket medical spending and how those data compare with data from MEPS and the Medical Care Beneficiaries Survey (MCBS)
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From page 180... ...
Data comparing the annual per person total out-of-pocket spending for health services by both the institutionalized and noninstitutionalized populations ages 75-79 showed the HRS and the MCBS to be very close. Again, this is due to the much higher measurement or assessment of prescription drug cost in the HRS.
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From page 181... ...
Nonetheless, the conclusion is that there is a lot of cross-wave stability in spending, which needs to be taken into account in assessing health care spending risk. Using results from a paper he coauthored on the economic preparation for retirement, Hurd showed how these data combining income wealth and out-of-pocket spending can be applied to see what difference risk makes in a common assessment of economic status.
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From page 182... ...
Once they are out in a tail, because of the high serial correlation, they tend to stay out in the tail. For single persons ages 66-69 with no health care spending risks, 61 percent were adequately prepared.
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From page 183... ...
rules for tax-qualified long-term care services and insurance policies define a chronically ill individual as someone who meets either an activity of daily living (ADL) trigger or a cognitive impairment trigger (Internal Revenue Service, 1997)
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From page 184... ...
. Individuals who are certified as chronically ill because they meet the ADL and/or cognitive impairment triggers are eligible for tax-free benefits under a long-term care insurance policy, and they can deduct the costs of qualified long-term care services and insurance premiums as itemized medical expenses, subject to certain limitations, when filing their federal income tax returns for that year (Internal Revenue Service, 1997)
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From page 185... ...
Stallard presented unpublished tabulations of the NLTCS which showed that the mean age by disability status for persons meeting only the HIPAA ADL trigger was 79.5 years for men and 82.0 years for women; for persons meeting only the HIPAA cognitive impairment trigger, the mean age was 82.5 for men and 84.1 for women, and for persons meeting both the ADL and the cognitive impairment triggers, the mean age was 81.7 for men and 86.0 for women. For those who met both triggers at the same time, the average age was actually slightly younger for men than for the cognitive impairment trigger, 81.7 versus 82.5, but older for women, 86.0 versus 84.1.
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From page 186... ...
He next looked at the Medicare program expenditures, excluding payments for persons with end stage renal disease, payments made while in long-term institutional status, and payments for hospice care based on his unpublished tabulations of the NLTCS. The retained payments included only the components that were used in setting capitation rates for managed care plans.
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From page 187... ...
That is an important issue, and one to be concerned about particularly around the issue of low income and poverty. In terms of dealing with risk, the quality of health care coverage, of health insurance, is important.
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From page 188... ...
One thing to keep in mind -- and this shows up very clearly in the Consumer Expenditure Survey as well as in HRS spending data -- is the budget shares that go to health care spending. Of course, the shares do increase with age, and that is quite reasonable, he said.
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From page 189... ...
Although she is sure there is a lot of overlap between people with less than a high school education and those with low income, if he did that by initial level, maybe in the first year they are in the survey, or some average, he will probably find higher risk for people with low income than he calculated using education. Hurd explained that they thought about doing the analysis by income or wealth but decided not to because of the classification error on income and wealth.
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From page 190... ...
He asked whether this 20 percentage point difference of adequacy is a different calculation, or whether it is something that is happening with using a smaller subset of the HRS. Hurd responded that neither he nor Banthin included Social Security as a wealth measure.
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