November 23, 2016
3 min read

Medicare beneficiaries without supplemental insurance hit hardest by cancer costs

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Medicare beneficiaries who are diagnosed with cancer and are without supplemental health insurance incurred out-of-pocket expenses of nearly a quarter of their household income, according to a national survey-based study published in JAMA Oncology.

“The spending associated with a new cancer diagnosis gets very high quickly, even if you have insurance,” Lauren Hersch Nicholas, PhD, MPP, assistant professor in the department of health policy and management at Johns Hopkins Bloomberg School of Public Health, said in a press release. “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.”
Cancer treatment carries the highest per-person direct medical expenditures of any health condition in the Unites States, with costs expected to rise 40% from 2010 to 2020. Medicare covers 80% of outpatient health costs and carries copays of $1,000 for each hospital visit, with no out-of-pocket (OOP) maximums.

In their study, Nicholas and Amol K. Narang, MD, assistant professor in the department of radiation oncology and molecular radiation sciences at Johns Hopkins School of Medicine, addressed the gaps associated with OOP costs for Medicare beneficiaries.

Nicholas and Narang analyzed survey data from 18,166 Medicare beneficiaries — including 1,409 adults (median age, 73 years; 53.6% men) who were diagnosed with cancer between 2002 and 2012 — who participated in the Health and Retirement Study, which was a nationally representative panel study of U.S. residents aged older than 50 years.

The amount of annual OOP expenses for patients diagnosed with cancer during the study was largely determined by whether the patient had supplementary insurance.

Those with fee-for-service Medicare alone (13.3%, n = 187) incurred average OOP expenditures of $8,115, which was equivalent to a mean of 23.7% of their household income. Individuals with OOP costs in the highest 10% had OOP costs that were 63.1% of their household income, mostly due to hospitalization costs, which accounted for 41.6% of OOP expenses.

Medicare beneficiaries with Medicaid (7.9%, n = 111) incurred the lowest annual OOP expenditures ($2,116), followed those insured by the Veterans Health Administration (8.2%, n = 116; $2,367), employer-sponsored insurance (27.8%, n = 391; $5,492), Medigap (25.1%, n = 353; $5,670), and Medicare health maintenance organization (17.8%, n = 251; $5,976).

Additionally, a new diagnosis of cancer (adjusted OR = 1.82, 95% CI, 1.55-2.23) or common chronic noncancer condition (adjusted OR = 1.82, 95% CI, 1.69-1.97) were associated with greater odds of incurring costs in the highest decile of OOP expenditures.

Inpatient hospitalization was the primary driver of high OOP expenditures in patients with cancer, ranging from 12% to 46% of OOP spending across insurance types.

“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 said in the release. “In addition to efforts aimed at lowering cancer costs, we need to think about how to offer our seniors better insurance coverage.”

Because inpatient hospitalization accounts for the largest component of Medicare spending for cancer treatment, there is a need for more oncology-specific urgent care clinics, Narang and Nicholas wrote. After the opening of an oncology-specific urgent care clinic, patients hospitalized after radiotherapy dropped from 35 to 18 per month.

Researchers also suggested a need to change the design of Medicare benefits, which carry a $1,288 deductible per 90 days for Part A hospital stays, compared with a $166 deductible for Part B services.

“We should expect to spend some of our income on health care,” Nicholas said. “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.”

Jonas A. de Souza

Rena M. Conti

Physicians and policy makers should be particularly concerned about the potential financial distress of Medicare beneficiaries, especially those without supplementary insurance, Jonas A. de Souza, MD, MBA, and Rena M. Conti, PhD, both of The University of Chicago, wrote in an accompanying editorial.

“This is an important finding given that the number of underinsured U.S. patients — those covered by high-deductible health plans and plans requiring patients to pay coinsurance (a percentage of a medical charge) rather than copayments (a flat fee) when care is provided — is growing,” de Souza and Conti wrote. “Monthly income for seniors derived from Social Security benefit payments alone has also stagnated since the Great Recession.

“... In summary, it is imperative that our health care system ensures patients access to the promise of dramatically improved quality of life without bankrupting their ability to pay for life’s other necessities or exacerbating national disparities in health and wealth,” they added. – by Chuck Gormley

Disclosures : The researchers, de Souza and Conti report no relevant financial disclosures.