- Issue: The Medicare program specifically excludes coverage of dental, vision, and hearing services. As a result, many beneficiaries do not receive necessary care. Those that do are subject to high out-of-pocket costs.
- Goal: Examine gaps in access to dental, vision, and hearing services for Medicare beneficiaries and design a voluntary dental, vision, and hearing benefit plan with cost estimates.
- Methods: Uses the Medicare Current Beneficiary Survey, Cost and Use File, 2012, with population and costs projected to 2016 values.
- Findings and Conclusions: Among Medicare beneficiaries, 75 percent of people who needed a hearing aid did not have one; 70 percent of people who had trouble eating because of their teeth did not go to the dentist in the past year; and 43 percent of people who had trouble seeing did not have an eye exam in the past year. Lack of access was particularly acute for poor beneficiaries. Because few people have supplemental insurance covering these additional services, among people who received care, three-fourths of their costs of dental and hearing services and 60 percent of their costs of vision services were paid out of pocket. We propose a basic benefit package for dental, vision, and hearing services offered as a premium-financed voluntary insurance option under Medicare. Assuming the benefit package could be offered for $25 per month, we estimate the total coverage costs would be $1.924 billion per year, paid for by premiums. Subsidies to reach low-income beneficiaries would follow the same design as the Part D subsidy.
Dental, vision, and hearing services are not covered under Medicare, although a small minority of beneficiaries have supplemental private coverage or Medicaid coverage for these benefits.1 In 2012, 12 percent of all Medicare beneficiaries reported having coverage for dental services. More than four of five (85%) received these benefits under employer-sponsored health insurance.2 (See Appendix.) Options for purchasing supplemental insurance for hearing and vision services are also very limited for Medicare beneficiaries; these services are available primarily through employer-sponsored health insurance or Medicare Advantage plans. For low-income Medicare beneficiaries who also have Medicaid, there is significant variation in what state Medicaid programs will cover; these services are often the first to be cut from a state’s program when budgetary pressures surface.3 Studies have shown that cost poses a significant barrier for older or disabled adults in obtaining dental, vision, and hearing services; half of older Americans reported that cost was their top reason for not visiting a dentist in the past year.4
Older adults who do not get the dental, vision, and hearing services they need or who have to delay needed treatment because of cost are at greater risk for avoidable emergency department visits, hospitalizations, skilled nursing facility visits, falls, isolation, depression, and greater dependence on family caregivers.5 Those who do receive services have a high out-of-pocket cost burden. Medicare beneficiaries spend an average 39 percent of their total out-of-pocket health expenses on services not covered by Medicare.6
There have been legislative efforts to include dental, vision, and hearing services in Medicare to help protect beneficiaries against the high costs of care.7 However, no progress has been made in meeting this goal. This brief describes the current access-to-care and cost challenges that Medicare beneficiaries face for dental, vision, and hearing services and outlines a policy option to close the gaps. It also considers the optimal design features that should be included in such a policy. This paper expands upon a “Viewpoint” published in the Journal of the American Medical Association.8
The policy option offered in this analysis is a voluntary supplemental Medicare benefit financed by premiums. The analysis examines the potential costs of including a subsidy to address unmet need among low-income Medicare beneficiaries, following the same design as the Part D low-income subsidy. All calculations are based on spending and utilization reported in the Medicare Current Beneficiary Survey (MCBS) Cost and Use File, 2012, projected to 2016. (For more detail, see How We Conducted This Study.)
Dental, Vision, and Hearing: Unmet Need and High Cost Burdens
The analysis reveals high unmet need for dental, vision, and hearing services, as well as cost burdens. Among all Medicare beneficiaries, of those who needed a hearing aid, 75 percent did not have one; of those who had trouble eating because of their teeth, 70 percent did not go to the dentist in the past year; and of those who had trouble seeing, 43 percent did not have an eye exam in the past year.
Access to care and unmet need vary by income level. There is a 35-percentage-point difference in access to necessary dental care from the lowest- to highest-income quintile. More than three-quarters (77%) of people with incomes below 100 percent of the federal poverty level (i.e., less than $11,407 for an individual and $14,376 for a couple age 65 and older in 2016) did not have a dental visit in the previous year (Exhibit 1). High-income beneficiaries with hearing concerns were far more likely than those with low incomes (31% vs. 16%) to report having a hearing aid. Overall, access to hearing services was much lower across all income groups compared to dental and vision services, likely reflecting the high associated costs. Midlevel hearing aids cost approximately $4,500. The stigma or cosmetic concerns associated with hearing aids likely play a role as well.9 Although there is less unmet need for vision services compared to dental and hearing, fewer than half of the low-income Medicare beneficiaries who report having trouble seeing had an eye exam in the previous 12 months.
Of those who did receive care for dental, vision, or hearing services in the previous 12 months, Medicare beneficiaries on average spent 4 percent of income on the out-of-pocket costs of these services (data not shown). For dental services, average total spending was $927 annually; it was $1,338 annually for those receiving hearing-related services. For both dental and hearing services, three-quarters of the total spending was paid for by beneficiaries. Average spending for vision services was $715, of which 60 percent was paid out of pocket (Exhibit 2).
Across dental, vision and hearing services, private insurance financed approximately 22 percent of total spending (Exhibit 3). Medicare pays for some vision spending (18%); Part B covers a yearly eye exam for diabetic retinopathy, a glaucoma test for those who qualify because of a diabetes diagnosis or family history of glaucoma, and diagnostic tests for macular degeneration. Medicare does not cover routine eye exams for eyeglasses or contact lenses. Medicaid pays a negligible portion of reported costs for any of the three services.
Benefit Design Considerations
We propose a voluntary supplemental Medicare benefit, based on the precedent set by Part D to allow supplemental benefits to be obtained with no federal subsidy. Unlike Part D, we envision that Medicare would directly administer the services rather than provide them through private plans. This approach has the advantage of maximizing Medicare’s purchasing power on behalf of beneficiaries, simplifying choice by using one benefit design, and reducing administrative overhead.
The benefit design follows the model of private insurance that often limits total plan payments for supplemental dental, vision, and hearing benefits, yet ensures access to essential preventive care. To encourage the use of preventive dental services, the benefit includes one oral health exam and cleaning per year, which is not subject to a deductible or coinsurance.
The cost of hearing aids is an important consideration. A pair of hearing aids can range from $2,000 to as much as $7,000.10 Current Medicare Advantage plans that provide some financial coverage for hearing aids pay between $400 and $500 per ear every three years, which only covers half of the lowest-cost alternative.11 In 2015, the President’s Council of Advisors on Science and Technology recommended that the U.S. Food and Drug Administration allow for certain basic hearing aids to be made available for purchase over the counter for the treatment of mild-to-moderate hearing loss.12 Under the illustrative supplemental policy option, Medicare would put the hearing device up for competitive bids. The benefit would cover the cost of the lowest bid for a high-quality device as is current practice in the Veterans Health Administration, which only pays $400 per device on average.13 There is evidence that high-quality devices could be much less expensive if Medicare used its purchasing power through competitive bids.14 Beneficiaries could opt to pay more for alternatives but would be covered only for the reference price. Given the high price of hearing aids, providing access to a lower-cost option may have a substantial impact on reducing the access barriers, particularly for poorer beneficiaries. Medicare Part B covers a diagnostic hearing exam prescribed by a physician only if it is for the purposes of medical treatment. This benefit also would cover routine hearing exams prescribed by a physician for the purposes of prescribing, fitting, or changing hearing aids.15 Evidence supporting preventive hearing exams for asymptomatic adults age 50 and older is limited.16
For vision care, a basic policy could cover an annual exam and one pair of corrective lenses up to a negotiated price, providing there was a significant change in vision. If no significant change in vision, the policy could limit the frequency of purchasing new corrective lenses, for example once every three years.
Potential Costs of Supplemental Benefit
To explore the potential costs of a voluntary supplemental benefit, we designed a benefit that has a $150 deductible for beneficiaries, 20 percent coinsurance, and a $1,500 annual total benefit limit on covered services (Exhibit 4). Preventive care visits (as described in the previous section) would be covered in full. The policy would be administered by Medicare and paid for through voluntary premiums.
To enhance affordability, low-income beneficiaries with incomes up to 150 percent of poverty (approximately $17,110 per year for an individual) could receive premium subsidies and reduced cost-sharing (Exhibit 4). The design follows Part D low-income provisions for premium subsidies. In addition, eligible low-income beneficiaries would not pay a deductible and would only be subject to 10 percent coinsurance for expenses up to the $1,500 total benefit limit. Individuals who apply for Part D low-income support would automatically qualify for the low-income subsidies for this supplemental plan.
Calculating the cost of a dental, vision, and hearing services benefit is challenging and depends on many assumptions. (See How We Conducted This Study.) As a starting point, we assume a monthly premium of $25, determined by the average dental, vision, and hearing spending of Medicare beneficiaries with incomes at or above 200 percent of the federal poverty level. The premium would need to be higher if only the highest-need beneficiaries participated.
We then calculate the total coverage costs using several simplified assumptions. For instance, people with existing access to coverage through Medicaid, employer benefits, and Medicare Advantage would be unlikely to take up the option. In addition, low-income beneficiaries (i.e., those with incomes below 150% of poverty) would be unable to afford a voluntary option without subsidies. We assume 70 percent participation by the remainder of the Medicare population — beneficiaries with incomes over 200 percent of poverty enrolled in Medigap supplemental plans or in traditional Medicare only.17 Given these assumptions, we calculate the total coverage costs to be $1.924 billion per year paid for by premiums.
Including the low-income premium and cost-sharing subsidies would cost approximately $1.05 billion per year to the federal government (Exhibit 5), assuming 70 percent of low-income beneficiaries without Medicaid participate.
If these assumptions are accurate, the voluntary option would insure an estimated 6.4 million Medicare beneficiaries without the low-income subsidies, and nearly 9 million Medicare beneficiaries with the low-income subsidies. This policy option can be used as a starting point for further discussion and more extensive modeling.
To provide benefits for more seniors, Medicaid could be required to cover dental, vision, and hearing services for low-income adults. Currently such services are optional. In 2012, 34 state and territory Medicaid programs covered hearing aids with either price limits or service day limitations such as frequency of replacements, fittings, or repairs, whereas 22 state and territory Medicaid programs did not provide any coverage.18 Forty-six state and territory Medicaid programs provided coverage for eyeglasses.19 Dental coverage varies widely. Eighteen states and territories do not provide coverage for dentures; approximately half the states and territories provide emergency dental care only.20 Further, Medicaid payment rates are so low for dental care that few dentists participate — thus coverage does not ensure access. Expanding service coverage under Medicaid could address unmet needs and cost barriers facing low-income Medicare beneficiaries with incomes up to the poverty level. Reaching those with incomes up to 150 percent of poverty would require expanding Medicaid, which would be challenging in the current environment. The costs for expanding service coverage in the Medicaid program have not been modeled as part of this analysis.
The Medicare program could offer a voluntary, supplemental insurance benefit for dental, vision, and hearing services that would begin to alleviate the unmet need for services and the financial pressure currently experienced by beneficiaries. This approach has the advantage of maximizing Medicare’s purchasing power on behalf of beneficiaries to provide affordable options for these services, specifically hearing aids. It also will simplify choice by using one benefit design and reduce administrative overhead. We calculate the total coverage costs would be $1.924 billion per year to insure an estimated 6.4 million Medicare beneficiaries, assuming a $25 per month premium and no federal subsidies. Including the low-income subsidies would cost Medicare an additional $1.052 billion per year and insure an estimated additional 2.4 million beneficiaries. As the population ages, these coverage needs will only continue to grow. If they are not addressed, the overall health of older people will suffer and the use of costly and avoidable services will increase.