Those without supplemental insurance incur
expenditures averaging a quarter of income
Newswise, November 30, 2016 — Beneficiaries of Medicare who
develop cancer and don’t have supplemental health insurance incur out-of-pocket
expenditures for their treatments averaging one-quarter of their income with
some paying as high as 63 percent, according to results of a survey-based study
published Nov. 23 in JAMA Oncology.
Researchers at the Johns Hopkins Bloomberg School of Public
Health and the Johns Hopkins Kimmel Cancer Center say their study shows that a
cancer diagnosis can be a serious financial hardship for many elderly and
disabled who receive Medicare, with annual out-of-pocket costs ranging from
$2,116 to $8,115, on top of what they pay to have health insurance. The
research shows that hospitalizations are a major driver of out-of-pocket costs.
Cancer treatment contributes more to health care costs in the
United States than treatment for any other disease, say the researchers.
“The spending associated with a new cancer diagnosis gets very
high quickly, even if you have insurance,” says one of the study’s authors,
Lauren Hersch Nicholas, PhD, MPP, an assistant professor in the Department of
Health Policy and Management at the Bloomberg School.
“The health shock can be
followed by financial toxicity. In many cases, doctors can bring you back to
health, but it can be tremendously expensive and a lot of treatments are given
without a discussion of the costs or the financial consequences.”
For their study, Nicholas and Amol K. Narang, MD, an
instructor in the Department of Radiation Oncology and Molecular Radiation
Sciences at the Johns Hopkins University School of Medicine and member of the
Kimmel Cancer Center, examined data from more than 18,000 Medicare
beneficiaries who were interviewed biennially between 2002 and 2012 for the
Health and Retirement Survey.
The survey is funded by the National Institute on
Aging and includes data from seniors in the U.S. with wide geographic,
socioeconomic and ethnic representation. Over the course of the study period,
more than 1,409 people received a cancer diagnosis.
Medicare covers just 80 percent of outpatient health costs and
has co-pays of $1,000 for each hospital visit. In the study, 15 percent of
participants had Medicare alone.
Others had some type of supplemental
insurance: 50 percent had a Medigap plan or were still receiving employer or
retiree benefits; 20 percent participated in a Medicare HMO; nine percent
received Medicaid (the federal plan for the poorest Americans); and six percent
got benefits from the Veteran’s Administration (VA). Each type of insurance
covers a varying amount of the costs that Medicare doesn’t cover.
The researchers found that the average annual out-of-pocket
costs associated with a new cancer diagnosis were $2,116 for Medicaid
beneficiaries; $2,367 for the VA; $5,492 for those with employer-sponsored
plans; $5,670 for those with Medigap; $5,976 for those with a Medicare HMO; and
$8,115 for those without supplemental insurance of any kind. There are no caps
on how much Medicare beneficiaries can be asked to pay.
Survey respondents without supplemental insurance reported
that their average annual out-of-pocket costs were one-quarter of their annual
income and, of those, 10 percent reported that those costs were at least 63
percent of annual income.
“Cancer costs are high, and a significant segment of our
seniors who don’t have adequate insurance coverage can be hit hard by this,”
Narang says. “In addition to efforts aimed at lowering cancer costs, we need to
think about how to offer our seniors better insurance coverage.”
The researchers say one solution, though expensive, would be
to cap the amount of out-of-pocket costs a patient can be charged each year.
Many private insurance plans have such caps, known as catastrophic coverage.
Congress would need to enact such a reform.
Narang and Nicholas found that inpatient hospitalizations
accounted for between 12 percent and 46 percent of out-of-pocket cancer spending
depending on whether and what type of supplemental insurance a patient had.
Inpatient care can be necessary for surgical procedures and to handle severe
side effects of treatment.
Narang says that doctors can help avoid hospitalizations with
more intensive outpatient management of common side effects.
He also points to
the Kimmel Cancer Center’s urgent care clinic which has reduced hospitalization
rates in patients undergoing cancer therapy. For example, among those
undergoing radiation, the average number of patients who were hospitalized
during their course of treatment or within 60 days decreased from 35 per month
to 18 per month after the clinic opened. Of note, 10 percent of
hospitalizations over this time resulted in patient liabilities of more than
$2,000; among Medicare patients without supplemental insurance, 10 percent of
their hospitalization-associated patient liabilities exceeded $10,000.
The researchers say that the study’s limitations include the
potential for inaccuracies in survey respondents’ answers, misclassification of
data or incomplete reporting. For the study, the researchers provided ranges
within certain survey questions when respondents could not identify a specific
value.
Because the study did not identify specific information on the
type of hospitalizations among survey respondents, Narang says that more
research is needed to understand which of these hospitalizations are truly
preventable.
“We should expect to spend some of our income on health care,”
Nicholas says. “But many people are unprepared to spend more than a quarter of
their income treating a single disease. The physical disease is terrible and
then you have to figure out how to deal with the economic fallout associated
with paying to treat it.”
“Out-of-pocket spending and financial burden among Medicare
beneficiaries with cancer” was written by Amol K. Narang and Lauren Hersch
Nicholas.
The study was supported by a grant from the National Institute
on Aging (K01AG041763).
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