January 1, 2006
Michelle M. Doty, Sara R. Collins, Cathy Schoen, Karen Davis, Jennifer L. Nicholson, Jennifer L. Kriss
S. R. Collins, K. Davis, C. Schoen, M. M. Doty, and J. L. Kriss, Health Coverage for Aging Baby Boomers: Findings from the Commonwealth Fund Survey of Older Adults, The Commonwealth Fund, January 2006
Employers are responding to rising health insurance premiums by shifting more of their costs to employees in the form of greater premium contributions, higher deductibles, larger copayments, and slower wage increases. Some employers, particularly small firms, are dropping coverage altogether. The combination of rising out-of-pocket health care costs and sluggish wage growth threatens workers' ability to save for retirement. This is particularly true for older adults ages 50 to 64, or "baby boomers," whose per capita health care expenditures are more than twice those of younger adults.
This report presents a new analysis of The Commonwealth Fund Survey of Older Adults that explores the extent and quality of health insurance coverage for baby boomers who are in the workforce, with a special emphasis on those with low and moderate incomes.
Among the key findings are:
- Older adults have high rates of chronic health conditions. The incidence of chronic conditions increases dramatically with age, placing older adults at greater risk of incurring high medical costs than younger adults. Sixty-two percent of 50-to-64-year-olds in working households reported they had at least one of six chronic conditions. High blood pressure, arthritis, and high cholesterol were the most common problems, with about 30 percent of respondents citing any one.
- Many working older adults have unstable health insurance coverage. One-fifth of older adults in working families were either uninsured at the time of the survey or had histories of unstable coverage since age 50. Older adults in working households with low and moderate incomes report particularly high rates of unstable coverage. More than one-half (54%) of older adults in working households with incomes under $25,000 and one-third (33%) of those with incomes between $25,000 and $39,999 said they had a time when they went without health insurance coverage.
- Older adults with low income, with individual coverage, or with no insurance spend substantial shares of their income on coverage and health care.
- Premiums. More than half (55%) of older adults with coverage on the individual market spend $300 or more per month, or $3,600 or more annually, on premiums. In contrast, only 16 percent of older adults with employer coverage spend in excess of $3,600 per year on premiums. Nearly two of five insured working older adults with household incomes under $40,000 spend 5 percent or more of their income on premiums and nearly one-quarter (23%) spend 10 percent or more. More than three of five (62%) older adults with individual coverage said that it was very or somewhat difficult to afford their premiums compared with about one-quarter (26%) of those with employer coverage.
- Deductibles. Despite their higher premiums, nearly half (48%) of older adults with individual coverage have per-person annual deductibles of $1,000 or higher. In comparison, about 8 percent of older adults with employer coverage face deductibles of $1,000 or more per year.
- Out-of-pocket costs. Thirty-eight percent of uninsured older adults and 37 percent of older adults with coverage through the individual market spent $1,000 or more per year on out-of-pocket health care costs, including prescription drugs. In contrast, 21 percent of older adults with employer coverage spent $1,000 or more. Older adults in low- and moderate-income working households are also more likely to spend a large share of their income on out-of-pocket costs than are those in higher-income households.
- Older adults who are uninsured, have individual coverage, and have low or moderate incomes have reduced access to care. Nearly one-quarter (23%) of older adults in working households reported at least one cost-related access problem. Fifty-four percent of uninsured older adults and 30 percent of older adults with individual coverage reported at least one access problem. Older adults of low or moderate income were also more likely to report cost-related access problems.
- Older adults report high rates of medical bill problems. More than one-third (35%) of older adults in working households either had a medical bill problem in the last 12 months or were paying off accrued medical debt. The problem was most severe among uninsured older adults.
- Older adults are concerned they will not be able to afford health care. Two-thirds (66%) of older adults in working households said they were very or somewhat worried they might not be able to afford needed medical care in the future.
- Older adults would be interested in new Medicare savings accounts and participating in Medicare early. A substantial majority of older adults in working families (71%) said they would be interested in having 1 percent of their earnings deducted from their paychecks and placed into an account, which could later be used to pay for long-term care or other health services that Medicare does not cover. In addition, 72 percent of older adults in working households said they would be very or somewhat interested in enrolling in Medicare before age 65.