INTRODUCTION

One out of every five elderly Americansfaces each day on a limited income withlittle flexibility for extra or unexpectedmedical expenses. When medical care isneeded, these 6 million poor and near-poorelderly Americans depend on Medicare forassistance with their medical bills. The uni-versal coverage of Medicare assures thementry to America's health care system andoffers protection from financial catastrophewhen illness strikes. However, gaps in thescope of Medicare's benefits and financialobligations for coverage can result inonerous financial burdens.

Low-income elderly people are particu-larly vulnerable because they are morelikely to be experiencing health problemsthat require medical services than thosewho are economically better off, but areless able to afford needed care because oftheir lower incomes. Even routine care,such as physician visits or prescriptiondrugs, can require older and poorer ben-eficiaries to make hard choices betweenbasic necessities and needed health careservices. Medicaid serves as an importantcomplement to Medicare by assisting low-income Medicare beneficiaries with theirMedicare premiums and cost-sharing andby providing coverage for prescriptiondrugs and long-term care (LTC) servicesthat are not available through Medicare.Without Medicaid's assistance, the costs ofbasic medical care can impede access to

Medicare, Medicaid, and the Elderly PoorDiane Rowland, Sc.D., and Barbara Lyons, Ph.D.

The authors are with the Henry J. Kaiser Family Foundation.The opinions expressed are those of the authors and do not nec-essarily reflect those of the Henry J. Kaiser Family Foundationor the Health Care Financing Administration.

care and erode financial security for lowincome elderly people.

This article profiles the economic andhealth status of the low-income elderlypopulation served by Medicare, assessesthe impact of Medicare, and examines therole Medicaid plays as a supplement toMedicare. Particular emphasis is given tothe burdens medical expenses impose onlow-income elderly people, the extent towhich coverage to supplement Medicarecan assist in alleviating the impact of finan-cial burdens on access to care, and the im-plications of potential changes in the scopeand structure of Medicare and Medicaidfor the elderly low-income population.

POVERTY AND ILLNESS IN THEELDERLY POPULATION

Despite general improvements in theeconomic situation of the elderly popula-tion over the last 3 decades, many elderlyAmericans continue to struggle to pay liv-ing expenses on low or modest incomes.Forty-one percent of the Nation's 31 millionelderly people living in the communityhave incomes below twice the Federal pov-erty level (FPL) and 1 in 5 are poor or near-poor (U.S. Bureau of the Census, 1996).

In 1994, the FPL was $7,100 per year inincome for a single elderly adult and $9,000for an elderly couple. Twelve percent of theelderly population-3.7 million people-had incomes below the poverty level andanother 7 percent-2.2 million people-were near-poor with incomes between 100and 125 percent of FPL (Figure 1). 1

' The figures and tables appear at the end of the article.

HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18,Number2

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Together, these 5.9 million poor and near-poor people comprise Medicare's non-insti-tutionalized low-income elderly population.Another 1.4 million elderly reside in nurs-ing homes and receive assistance fromMedicaid (Lyons, Rowland, and Hanson,1996).

The likelihood of living on a low incomeis greatest for women, minorities, and theoldest Americans (Figure 2). Poverty ratesincrease with age, with 23 percent ofpeople 75 years of age or over poor or near-poor, in contrast to 16 percent of those 65-74 years of age. Nearly one-fourth of eld-erly women are poor or near poor,reflecting their lower wage levels duringworking years, their increased risk of fi-nancial stress from widowhood, and lon-gevity that exceeds savings. Elderly mi-norities are particularly vulnerable to lowincomes. Thirty-seven percent of black eld-erly people and 36 percent of Hispanic eld-erly people have incomes below 125percent of FPL.

Poverty is clearly linked to educationallevel and highly correlated with maritaland living arrangements. Well-educated,married couples are financially better offthan those who are less educated, single,and living alone. Educational levels corre-spond to different job opportunities and ca-reers, with the more highly educated likelyto have better retirement benefits andmore personal savings from their workingyears. Among today's elderly population,42 percent have less than a high schooleducation, but there are significant differ-ences by income. Seventy percent of thepoor elderly, compared with 23 percent ofthe non-poor elderly, are without a highschool diploma (Figure 3).

Marital status and living arrangementalso differ significantly by income, with 42percent of the poor compared with 21 per-cent of the non-poor living alone, and onlyone-third (31 percent) of the elderly poor

are married, in contrast to 72 percent of thenon-poor elderly. This reflects the olderage composition of the poor elderly (14 per-cent are over 85 years of age comparedwith 5 percent of the non-poor), and the tolltime, illness, and loss of a spouse can im-pose on an individual's economic well-be-ing. Yet it also means that the poor elderlyare less likely to have family or companionsliving with them who can assist withmedical or financial needs.

Medicare coverage is especially impor-tant to low-income elderly people becausethey are in poorer health than higher in-come elderly people and have few financialassets to draw on when faced with highmedical costs. Poor health status, multiplechronic conditions, and functional limita-tions are all more prevalent among the low-income elderly population than amongthose with higher incomes. These condi-tions increase the need for and utilizationof medical services which in turn increasesthe out-of-pocket expenses for cost-sharingand uncovered medical expenses.

The burden of illness is a serious prob-lem for many poor and near-poor elderlypeople. Overall, one-fourth (24 percent) ofthe elderly population reports their healthstatus as fair or poor (Figure 4). Over one-third (36 percent) of the poor and nearlyone-third (32 percent) of the near-poor eld-erly report their health as fair or poor com-pared with only 17 percent of the non-poorelderly with incomes above 200 percent ofFPL. Poor health status has been shown tobe highly predictive of the need for medicalcare (Manning, Newhouse, and Ware, 1981).

Chronic conditions requiring increasedcontact with the medical care system andongoing health care costs are more preva-lent in the elderly population than in thenon-elderly population and can be particu-larly burdensome for low-income elderlypeople. All elderly people are at increasedrisk of chronic illness, but low-income

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people are more likely to have chronichealth problems than non-poor elderlypeople (Figure 5). Nearly two-thirds (65percent) of poor elderly people suffer fromarthritis that can impair mobility and resultin the need for medication for treatmentand pain relief. Similarly, the prevalence ofdiabetes and hypertension, both illnessesrequiring substantial medication costs andongoing physician supervision, is highestin the low-income cohorts of the elderlypopulation.

Functional disabilities contributing tothe need for LTC assistance further com-pound the medical problems of elderlypeople (Rowland, 1989). Among non-insti-tutionalized elderly Medicare beneficiaries;7.8 percent report needing help to performone or more activities of daily living(ADLs), such as dressing, eating, andtoileting, and many more report difficultyin carrying out these activities due tohealth problems. The rates are higher forthe poor and near-poor elderly, with 12.9percent of the poor and 10.5 percent of thenear-poor reporting such limitations (Fig-ure 6). Low-income elderly people are alsomore likely to have three or more ADLsand increased dependency because of mul-tiple limitations than those with higher in-comes. Elderly people with functional limi-tations are often financially strained bynon-medical needs and expenses as well asby the need for additional services and spe-cial transportation arrangements to obtainmedical care.

In sum, poor and near-poor elderlypeople are more likely to be experiencinghealth problems for which they requiremedical services than elderly people whoare economically better off, but they areless able to afford needed care because oftheir lower incomes. For those who needmedical care and incur large out-of-pocketexpenditures, medical expenses can lead to

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

impoverishment. The extent to which in-surance is available to assist with medicalbills becomes a crucial factor.

ROLE OF MEDICARE

With the enactment of Medicare in 1965,basic health insurance protection for hospi-tal care and physician services was ex-tended to nearly all elderly Americans. Theuniversal nature of Medicare coveragemeans that virtually no elderly person iswithout insurance. Medicare facilitates ac-cess to physician services and guaranteesadmission to a hospital when needed. Itmeans that coverage for the elderly doesnot vary by State of residence and does notlimit the elderly's choice of providers in themainstream of American medical care.Over its 30 years of operation, Medicarehas provided elderly Americans, and espe-cially poor elderly Americans, with the op-portunity to benefit from the many ad-vances of American medical technology,most notably treatment for heart diseaseand cataract surgery, and to gain improvedaccess to the health care system (Madansand Kleinman, 1980; Davis and Rowland,1986).

Low-income elderly people have beenparticularly reliant on Medicare coveragebecause they are in poorer health thanhigh-income elderly, and therefore, aremore likely to use health services. Al-though Medicare provides basic health in-surance to promote access to care, it is notan all-inclusive comprehensive and freemedical plan for the elderly poor and near-poor. Financial concerns can still impedeaccess to needed medical care, especiallyfor those who have the most health needs.Medicare beneficiaries in poorer healthare more likely to report barriers to carethan beneficiaries with better health(Rosenbach, Adamache, and Khandker, 1995).

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Some of the financial burdens for carestem from the design and scope of theMedicare benefit package. Modeled afterprivate insurance coverage for the non-eld-erly population, Medicare has substantialcost sharing requirements and financial ob-ligations for beneficiaries. The hospital in-surance (Part A) component providesfairly extensive coverage of short-term hos-pital care and some coverage of post acuteskilled nursing facility and home healthservices. The supplementary medical in-surance (Part B) component of Medicarecovers physician care and related ambula-tory services and home health visits. Medi-care requires beneficiaries to pay a pre-mium for coverage under Part B, adeductible for hospital care under Part A,and a deductible and 20 percent coinsur-ance for most physician and ambulatorycare services under Part B (Table 1).

For many elderly people, Medicare thusprovides essential, but incomplete, protec-tion against medical expenses. In additionto the required premiums and cost shar-ing, Medicare's benefit package does notcover the full range of health servicesneeded by many elderly people. Particu-larly absent from the Medicare benefitpackage is coverage of outpatient prescrip-tion drugs, vision care, and dental serv-ices. In addition, Medicare does not coverchronic LTC needs, most notably nursinghome care for the disabled elderly (Federand Lambrew, 1996).

Out-of-pocket spending on acute caremedical services and insurance premiumsfor both Medicare and private supplemen-tal policies are significant expenses in thebudgets of elderly Americans (Moon andMulvey, 1996). The average dollar amountof out-of-pocket spending increases with in-come, averaging $1495 in 1994 for non-poor elderly and $913 for poor elderlypeople (Figure 7). The lower level ofspending by low-income elderly people

6 4

reflects both their limited financial abilityto pay substantial amounts and the likeli-hood that some of the low-income elderlyare assisted with their medical expensesand premiums by Medicaid. Although thepoor elderly spend a lower dollar amounton out-of-pocket medical expenses thanhigher income elderly, that spending con-stitutes a much larger share of the overallincome of the poor. Health expendituresfor acute care services and premiums bythe elderly represent one-third of thefamily income of poor elderly people com-pared with 16 percent for non-poor elderlyfamilies (Figure 8).

To provide assistance with cost sharingand additional protection, most elderlypeople have private insurance and/or Med-icaid coverage to supplement their Medi-care coverage (Figure 9). In 1992, 81 per-cent of Medicare's elderly beneficiarieshad private supplemental insurance, oftencalled medigap insurance, in addition toMedicare. An additional 9 percent of eld-erly beneficiaries received assistance fromMedicaid because of their low incomes.However, 10 percent of Medicare beneficia-ries had neither Medicaid nor private in-surance to supplement Medicare. Forthese Medicare-only beneficiaries, any ex-penses uncovered by Medicare are out-of-pocket liabilities.

The pattern of insurance coverage variessignificantly by income. Private insuranceto complement Medicare is most commonamong the elderly non-poor population andless extensive as a form of financing forthose with lower incomes (Figure 10).Among the elderly poor, over one-third (36percent) have Medicaid supplementarycoverage, 46 percent have private medigappolicies, and 18 percent rely solely onMedicare. For the near-poor elderly, pri-vate insurance coverage is more extensive,with 64 percent privately insured. Amongthe near-poor elderly, 15 percent have

HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18, Number 2

Medicaid coverage and 21 percent relysolely on Medicare, reflecting the lowerpenetration of Medicaid coverage for thenear-poor population.

Affordability of private insurance poli-cies to supplement Medicare is a majorbarrier to coverage for many low-incomeelderly beneficiaries. Higher income eld-erly beneficiaries are much more likely tohave retiree benefits that provide health in-surance coverage to supplement Medicare.Low-income people are less likely to havehad the types of jobs during their workingyears that offer private health insurance af-ter retirement as a benefit. As a result,higher income elderly are more likely tohave employer-sponsored coverage, whilelow-income elderly are more reliant onmedigap coverage.

An individually purchased medigap planin 1992 averaged over $1,000 (Chulis,Eppig, and Poisal, 1995). The high cost ofmedigap coverage results in a greater fi-nancial burden on low-income beneficia-ries compared with more economicallyadvantaged elderly people. For a poor eld-erly individual living on an annual incomeof less than about $7,000, spending $1,000on a medigap policy can substantially strainresources. In recent years, Medicaid hashelped to fill this gap by providing assis-tance with Medicare's financial obligationsto low-income elderly Medicare beneficia-ries, but the large share of both poor andnear-poor elderly people relying solely onMedicare for coverage underscores thelimits of Medicaid's reach.

ROLE OF MEDICAID

Medicaid makes Medicare coverage af-fordable for over 4 million low-income eld-erly Medicare beneficiaries by serving astheir medigap policy. For those who qualifyfor assistance from the means-tested Med-icaid program, Medicaid coverage is an

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important source of health care financing.Medicaid will pay the Medicare Part B pre-mium for Medicare beneficiaries with in-comes below 120 percent of FPL plus theMedicare cost sharing for those with in-comes below FPL. Elderly cash assistancerecipients and others covered at State op-tion can also receive additional benefitsfrom Medicaid to supplement Medicare,including prescription drugs and LTCcoverage.

In recent years, Medicaid coverage ofthe elderly has been expanded consider-ably to assist low-income Medicare benefi-ciaries with the growing cost of Medicarepremiums and cost-sharing. Most notably,as part of the Medicare Catastrophic Cov-erage Act of 1988, States were required byJuly 1992 to provide Medicaid assistancewith the Part B premium and Medicarecost-sharing to all elderly individuals andcouples with incomes below FPL and as-sets of less than $4,000 for individuals and$6,000 for couples. The individuals coveredunder this provision are referred to asQualified Medicare Beneficiaries (QMBs).The act also required States to phase in by1995 assistance with Medicare's Part Bpremium to individuals with incomes be-tween 100 and 120 percent of FPL. For thisgroup, known as Specified Low-IncomeMedicare Beneficiaries (SLMBs), assis-tance is limited to the premium payments.States are not required to provide eithergroup with wrap-around benefits tosupplement Medicare.

The over 4 million low-income elderlypeople on Medicaid qualify for assistanceby various routes, as shown in Figure 11.Over one-half of the elderly with Medicaidcoverage obtain eligibility as "categoricallyneedy" because they are recipients of cashassistance or eligible for assistance underthe Supplemental Security Income pro-gram. Other individuals are covered at theoption of the State as "medically needy"

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eligibles. These individuals, accounting for20 percent of elderly Medicaid beneficia-ries, have incomes above welfare cash as-sistance levels, but incur expenses forhealth services that reduce their availableincome to below the income standard foreligibility.

Both the categorically needy and medi-cally needy groups receive Medicaid ben-efits to complement Medicare's benefitpackage as well as assistance with Medi-care premiums and cost-sharing. The eld-erly in nursing homes with Medicaid cov-erage are included in both the categoricaland medically needy groups. The QMB/SLMB beneficiaries with their coveragemainly for Medicare financial obligationsrepresent 13 percent of Medicaid's elderlybeneficiaries. The remainder of low-in-come elderly beneficiaries qualify for cov-erage under coverage provisions that are atState option.

Despite Medicaid's important role inproviding protection for Medicare pre-mium and cost sharing requirements,Medicaid spending on behalf of elderlybeneficiaries goes primarily toward cover-age of more costly LTC services. In 1993,Medicaid spending totaled $125 billion, ofwhich $34 billion was spent on services forthe low-income elderly (Liska et al., 1995).One-fourth of this spending went towardsacute care services and Medicare pay-ments, and the remainder was devoted toLTC spending on nursing homes and com-munity-based services (Figure 12). In1993, Medicaid paid $2.7 billion to theMedicare program on behalf of low-incomeMedicare beneficiaries for premium andcost-sharing obligations and spent an addi-tional $6 billion to supplement Medicare'scoverage of hospital and physician careand to cover other medical services, suchas prescription drugs not covered by Medi-care. These expenditures for acute care

and Medicare premiums accounted for 7percent of total Medicaid spending.

Medicaid thus plays a critical role in pro-viding financial protection to low-incomeelderly people. However, the scope ofMedicaid's protection remains limited interms of the share of the poor and near-poor population with coverage. Only one-third of the elderly poor and 15 percent ofthe near-poor elderly have Medicaid cover-age despite the financial benefits of suchcoverage. Lack of awareness and under-standing of the assistance Medicaid pro-vides, complex enrollment processes, lim-ited outreach activities by Federal andState governments, and reluctance to applyfor help from a welfare-linked program allcontribute to low levels of participation inMedicaid by the poor and near-poor elderly(Neumann et al., 1995).

IMPACT OF INSURANCE ONACCESS

The level of insurance protection to alle-viate financial barriers to care is clearly animportant element in securing access tocare for the low-income elderly population.Although Medicare coverage is universal,ability to pay for Medicare's cost-sharingrequirements varies for elderly people atdifferent income levels and with differentlevels of insurance supplementation. Lackof supplementary coverage through pri-vate insurance or Medicaid to fill gaps inMedicare coverage influences access tohealth services by elderly people. One-halfof the population that relies solely on Medi-care are poor or near-poor and likely to ex-perience financial burdens that jeopardizeaccess to care.

Examining utilization of ambulatory careservices by income status and insurancestatus shows that Medicare coverage hashelped to reduce differentials in access to

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care by income, but differentials stillremain when variations in insurance aretaken into account. Those with Medicare-only coverage do not have comparable ac-cess to those with private or Medicaid cov-erage to supplement Medicare. Levels ofphysician services are comparable acrossincome groups and, currently, revealsomewhat higher use rates for the low-in-come population, reflective of their poorerhealth status (Figure 13). However, physi-cian visits by insurance status, not control-ling for income, show that the Medicare-only population has fewer physician visitsthan the privately insured and notablyfewer visits than those with joint Medicareand Medicaid coverage (Figure 14). Thehigher rates for the Medicaid populationreflect their higher rates of chronic illnessand disability.

These statistics, however, combine theeffects of income and insurance coverageon utilization. Using Medicare spending asa proxy for health services utilizationshows lower levels of access for beneficia-ries without supplemental insurance. Low-income beneficiaries who rely solely onMedicare are less likely to use any Medi-care covered services over the course of ayear. Among poor and near-poor Medicarebeneficiaries, 30 percent of those with onlyMedicare coverage received no Medicarereimbursement for services, comparedwith 17 percent of those with privatesupplemental insurance and 11 percentwith Medicaid (Figure 15).

When access to care is assessed by in-surance status and income level, it is appar-ent that to be low-income and covered onlyby Medicare is associated with accessproblems. Measures of access problems,including no usual source of care, difficul-ties in obtaining care, and lower satisfac-tion levels for particular aspects of care,are indicative of problems in gaining entryto the health care system and in using

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services (Weissman and Epstein, 1993).Having a usual source of care, or a particu-lar place where care is obtained, is com-monly viewed as an indicator of access tomedical care and an important componentof primary care. Low-income Medicarebeneficiaries who rely solely on Medicareare over twice as likely as those with addi-tional coverage to be without a usualsource of care. Nearly one-fourth (22 per-cent) of Medicare-only beneficiaries reportno usual source of care compared with 8percent of those with private insurance and9 percent of those with Medicaid (Figure 16).

Problems in obtaining care, such as de-lay in seeking care due to cost, provide di-rect evidence of the impact of financial bar-riers to care. Problems in obtaining caremay compromise health status and resultin prolonged suffering and increased mor-bidity. If care is eventually obtained and theproblem has become more severe, it maybe more difficult and costly to treat be-cause of the delay. Low-income elderlyMedicare beneficiaries who have onlyMedicare are two times as likely to delayseeking needed medical care as those withadditional private insurance or Medicaid.One-fourth of low-income Medicare-onlybeneficiaries indicate that they delayedseeking medical care in the past year be-cause of worry about the cost (Figure 17).In contrast, only 13 percent of those withMedicaid or private insurance reportedsuch delays due to cost. Having additionalcoverage substantially lowers the likeli-hood of problems in gaining entry to thehealth care system.

Similarly, lower levels of satisfaction without-of-pocket costs reflects inadequate in-surance coverage and can be indicative ofaccess problems. Over one-fourth (27 per-cent) of low-income elderly Medicare-onlybeneficiaries report that they are unsatis-fied or very unsatisfied with the out-of-pocket costs they paid for medical care

67

(Figure 18). Those with private supplemen-tal coverage also reported similar levels ofdissatisfaction. Highlighting the financialprotection Medicaid provides for the low-income population, only 12 percent ofbeneficiaries who had Medicaid wereunsatisfied with out-of-pocket costs.

In sum, Medicare has contributed sub-stantially to the well-being of the elderly byfacilitating access to care and reducing fi-nancial burdens. The program providescoverage of medical care for virtually allelderly Americans, but Medicare's gaps incoverage and financial obligations are par-ticularly difficult for poor and near-poorelderly people to handle. Medicaid plays anessential role in supplementing Medicare'scoverage and makes Medicare work formany low-income Medicare beneficiaries.However, Medicaid's assistance does notextend to all low-income elderly people;those who are left to rely on Medicarealone are at substantial risk for accessproblems.

IMPLICATIONS FOR THE FUTURE

The three decades of experience withMedicare as a primary insurer and Medic-aid as a supplement for the low-incomeelderly demonstrate the importance ofboth basic coverage for all elderly peopleand additional financial assistance for low-income elderly people. For those in the eld-erly low-income population jointly coveredby Medicare and Medicaid, access to care,financial protection, and satisfaction withthe cost of medical care are all notablyhigher than for low-income elderly whodepend solely on Medicare. With the uni-versal base of Medicare as a building blockfor health care coverage, the elderly poorand near-poor with Medicaid supplementa-tion are able to access mainstream medicalcare without severe financial burden.

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The partnership between Medicare andMedicaid has enabled millions of low-in-come Medicare beneficiaries to realize thefull potential of Medicare coverage, but theability to maintain and expand that partner-ship to reach more of the low-income eld-erly population is uncertain. Proposals toincrease financial obligations under Medi-care or shift the program from a definedbenefit to defined contribution approachcould result in significant increases in ben-eficiary costs and undermine the adequacyof protection for the poorest beneficiaries.In the past, Medicaid coverage has beenused to fill in and compensate for changesin Medicare coverage. However, proposalsto convert Medicaid to a block grant toStates with a fixed and potentially reducedfederal contribution could restrict Medic-aid's ability to serve as a Medicare safetynet. Such a shift in Medicaid's structurecould also jeopardize the continuation ofthe current level of coverage Medicaidprovides to low income Medicare beneficiaries.

As the future of Medicare and Medicaidare debated, particular attention needs tobe given to the elderly poor. One in 10Medicare beneficiaries count on Medicaidto help with their medical expenses andMedicare financial obligations. Even withMedicaid assistance, the elderly poor de-vote one-third of their family income tohealth expenses. Low-income elderlyAmericans experience more health prob-lems and have greater use of health serv-ices with the associated cost for treatmentand medication than higher income eld-erly. The 1 in 5 low-income Medicare ben-eficiaries without Medicaid to supplementMedicare are particularly at risk. Evenwith Medicare's basic protection, the costfor premiums, cost-sharing, and uncoveredservices can compromise access to care.

To assure Medicare's adequacy forcoverage in the future, it is important to

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maintain assistance with financial obliga-tions and additional benefits that Medicaidprovides today. It is critical to either main-tain the Medicare-Medicaid partnershipfor the low-income elderly or to providedirect federal assistance to supplementMedicare for the elderly poor. Withoutsuch guarantees, Medicare's notableprogress in reducing gaps in service usebetween poor and non-poor elderly couldbe undone and millions of low income eld-erly Americans could have their access tomedical care compromised.

ACKNOWLEDGMENTS

The authors greatly appreciate the re-search assistance of Patricia Seliger andKristina Hanson of the Kaiser Family Foun-dation and the computer programming as-sistance of Laurie Pounder of the UrbanInstitute.

REFERENCES

Chulis, G., Eppig, F., and Poisal, J.: MCBS High-lights: Ownership and Average Premiums forMedicare Supplementary Insurance Policies.Health Care Financing Review 17(1):255-75, Fall1995.

Davis, K., and Rowland, D.: Medicare Policy: NewDirections for Health and Long-Term Care. Balti-more, MD. The Johns Hopkins University Press,1986.

Feder, J., and Lambrew, J.: Why Medicare Mattersto People Who Need Long-Term Care. Health CareFinancing Review 18(2):99-112, Winter 1996.

Health Care Financing Administration: MedicaidStatistics: Program and Financial Statistics, FiscalYear 1994. HCFA Pub. No. 10129. Washington.U.S. Government Printing Office, 1996.

Liska, D., Obermaier, K., Lyons, B., and Long, P.:Medicaid Expenditures and Beneficiaries: Nationaland State Profiles & Trends, 1984-1993. Report ofthe Kaiser Commission on the Future of Medicaid.Washington, DC. 1995.

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

Lyons, B., Rowland, D., and Hanson, K.: AnotherLook at Medicaid. Generations: 24-30, Summer1996.

Madans, J., and Kleinman, J.: Use of AmbulatoryCare by the Poor and Nonpoor. In: Health UnitedStates, 1980. Hyattsville, MD. Public HealthService, 1980.

Manning, W.G., Newhouse, J.R., and Ware, J.E.:The Status of Health in Demand Estimates: Be-yond Good, Excellent, Fair, and Poor. In Fuchs,C.R (ed.): Economic Aspects of Health. Chicago.Chicago University, 1981.

Mentnech, R.: An Analysis of Utilization and Ac-cess from the National Health Interview Survey:1984-92. Appendix IX in Summary Report to Con-gress: Monitoring the Impact of Medicare PhysicianPayment Reform on Utilization and Access. HealthCare Financing Administration, 1995.

Moon, M., and Mulvey, J.: Entitlements and theElderly: Protecting Promises, Recognizing Reality.Washington, DC. The Urban Institute Press, 1996.

Neumann, P., Bernardin, M., Evans, W., andBayer, E.: Participation in the Qualified MedicareBeneficiary Program. Health Care FinancingReview 17(2):169-78, Winter 1995.

Rosenbach, M., Adamache, K., and Khandker, R.:Variations in Medicare Access and Satisfaction byHealth Status: 1991-93. Health Care FinancingReview 17(2):29-49, Winter 1995.

Rowland, D.: Measuring the Need for Home Care.Health Affairs 8(4):39-51, 1989.

U.S. Bureau of the Census: Current Population Re-ports, Consumer Income Series P60-189, Income,Poverty, and Valuation of NonCash Benefits: 1994.Washington. U.S. Government Printing Office,1996.

Weissman, J., and Epstein, A.: Falling Through theSafety Net: Insurance Status and Access to HealthCare. Baltimore, MD. The Johns Hopkins Univer-sity Press, 1993.

Reprint Requests: Barbara Lyons, The Henry J. Kaiser FamilyFoundation, 1450 G Street, NW, Suite 250, Washington, DC20005. E-mail: blyons@kff.org

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Figure 1Distribution of Elderly, by Poverty Level: 1994

Non-Poor59%

NOTES: Estimates of non-institutionalized population. The Federal poverty level (FPL) in 1994 was $7,100 for a single individual and$9,000 for a couple. Poor is below 100 percent of FPL. Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater.

SOURCE: (U.S. Bureau of the Census, 1996).

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Figure 4

Percent of Elderly Medicare Beneficiaries Reporting Fair or Poor Health: 1992

Total Poor Near-Poor Modest Non-Poor

NOTES: Includes non-institutional continuously enrolled beneficiaries. Poor is below 100 percent of the Federal poverty level(FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater.

SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

73

Figure 6Percent of Elderly Medicare Beneficiaries Needing Help With ADL Limitations: 1992

Total Poor Near-Poor Modest Non-Poor

NOTES: Includes non-institutional continuously enrolled beneficiaries. ADL is activity of daily living. Poor is below 100 per-cent of the Federal poverty level (FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-pooris 200 percent of FPL or greater.

SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

Table 1

Out-of-Pocket Payments Under Medicare for Hospital and Physician Services'Hospital Insurance (Part A)

Coverage for Inpatient Hospital Services

Hospital Deductible

$736 per Spell of IllnessCoinsurance Days 61-90

$184 per DayCoinsurance for 60 Lifetime Reserve Days

$368 per Day

Supplemental Medical Insurance (Part B)

Coverage for Physician and Related Services

Premium ($42.50 per Month) $510 per YearDeductible $100 per Year

Coinsurance

20 Percent of Medicare Allowable Charges

' Effective January 1, 1996.SOURCE: Health Care Financing Administration: 1996 Data Compendium. Bureau of Data Management and Strategy.

Washington. U.S. Government Printing Office, March 1996.

HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2

7 5

Figure 7Out-of-Pocket Health Care Spending by the Elderly: 1994

NOTES: Spending includes acute care services and premiums. Poor is below 100 percent of the Federal povertyl evel (FPL). Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent ofFPL or greater.

SOURCE: (Moon and Mulvey, 1996).

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Figure 8Health Expenditures by the Elderly as a Share of Family Income: 1994

NOTES: Spending includes acute care services and premiums. Poor is below 100 percent of the Federal poverty level (FPL).Near-poor is 100-125 percent of FPL. Modest is 125-200 percent of FPL. Non-poor is 200 percent of FPL or greater.

SOURCE: (Moon and Mulvey, 1996).

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77

Figure 9Insurance Coverage of Elderly Medicare Beneficiaries: 1992

NOTE: Includes non-institutional continuously enrolled beneficiaries.

SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

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Figure 10Insurance Status of Elderly Medicare Beneficiaries, by Poverty Level: 1992

Poor

87%

Modest

3%

18%

36%

64%

Near-Poor

15%

Non-Poor

95%

5%

21%

NOTE: Includes non-institutional continuously enrolled beneficiaries.

SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

∎ Medicare/Private

Medicare Only

Medicare/Medicaid

HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2 79

Categorically Needy53%

NOTES: QMB/SLMB Is Qualified Medicare Beneficiary/Specified Low-Income Medicare Beneficiaries. Other includes eligibilitythrough legislation prior to 1988. Total equals 4.0 million beneficiaries 65 years of age or over.SOURCE: (Health Care Financing Administration, 1994).

Other1 4%

NOTE: Total expenditures equal $34 billion.SOURCE: (Liska et al., 1995).

Medicare Payments8%

80

Figure 11Distribution of Elderly Medicaid Population, by Eligibility: 1994

Figure 12Medicaid Expenditures for the Elderly: 1993

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

Figure 15Percent of Elderly Beneficiaries With No Medicare Reimbursement for Services: 1992

All ElderlyMedicare Beneficiaries

Low-Income Beneficiaries

30

17

I

I

ITotal

Medicare

Medicare/Only

Private

11

Medicare/Medicaid

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomesbelow 125 percent of the Federal poverty level.SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

8 2 HEALTH CARE FINANCING REVIEW/ Winter 1996/volume 18, Number 2

Figure 16Percent of Elderly Beneficiaries With No Usual Source of Care: 1992

Low-Income Beneficiaries

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomes be-l ow 125 percent of the Federal poverty level.SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 2

83

All Elderly Total Medicare Medicare/ Medicare/Medicare Beneficiaries Only Private Medicaid

Figure 17Percent of Elderly Beneficiaries Who Delayed Getting Care Due to Cost: 1992

C

ww

da

25

Low-Income Beneficiaries

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomes below125 percent of the Federal poverty level.

SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

8 4

HEALTH CARE FINANCING REVIEW/ Winter 1996/Volume 18, Number 23

All Elderly Total Medicare Medicare/ Medicare/Medicare Beneficiaries Only Private Medicaid

Figure 18Percent of Elderly Beneficiaries Who Are Unsatisfied With Out-of-Pocket Costs Paid

for Medical Care: 1992

Low-Income Beneficiaries

NOTES: Includes non-institutional continuously enrolled beneficiaries. Low-income beneficiaries are those with incomes be-l ow 125 percent of the Federal poverty level.

SOURCE: Estimates prepared by the authors based on analysis of the 1992 Medicare Current Beneficiary Survey.

HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18, Number 2

85

All Elderly Total Medicare Medicare/ Medicare/Medicare Beneficiaries Only Private Medicaid