Out-of-Pocket Burden of Health Care Spending and the Adequacy of the Medicare Part D Low-Income Subsidy


The Issue

Medications are among the biggest drivers of out-of-pocket health care costs in the United States. The burden falls particularly heavy on older adults, who, on average, take four to five drugs on a regular basis. This Commonwealth Fund–supported study examined the amount of household resources allocated to out-of-pocket health spending in the year before Medicare's Part D drug benefit took effect.

What the Study Found

  • In the year prior to Part D, more than half of Medicare families faced "burdensome" health care costs, meaning they spent more than 40 percent of their household resources on health care, after paying for housing, food, and other essentials.
  • Medicare families in poor health directed 68 percent of nonessential resources to health care.
  • Nearly two-thirds of out-of-pocket health care spending went to health insurance premiums and medications.
  • About one-quarter of Medicare families with burdensome health care costs were not eligible for a low-income subsidy.


As the researchers note, in the year before Medicare Part D was implemented, burdensome health care costs were common among Medicare beneficiaries. The study suggests that Part D and low-income subsidy benefits provide some relief, but leave many families at risk. In light of this, policymakers should reconsider eligibility rules for low-income premium subsidies, the authors recommend.

Publication Details

Publication Date: February 3, 2011
Authors: Becky Briesacher, Dennis Ross-Degnan, Sc.D., Anita K. Wagner, Pharm.D., Dr.P.H., Hassan Fouayzi, M.S., Fang Zhang, Ph.D., Jerry H. Gurwitz, M.D., and Stephen B. Soumerai, Sc.D.
B. A. Briesacher, D. Ross-Degnan, A. K. Wagner et al., "Out-of-Pocket Burden of Health Care Spending and the Adequacy of the Medicare Part D Low-Income Subsidy," Medical Care, June 2010 48(6):503–09.

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