Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108H EALT H 32 FIG. 1-10 components of medical out-of-pocket spending, by age: 2000-2002 Hospital Visits Nursing Home Stays Doctor Visits Dental Care Prescription Medicine Ages 55-64 Ages 75-84 Ages 65-74 Age 85+ 10.8% 15.1% 1.2% 51.9% 20.9% 5.5% 14.7% 1.9% 63.4% 14.5% 7.7% 7.4% 17.0% 59.2% 8.8% 5.1% 12.4% 3.5% 69.1% 9.9% by health insurance, whereas most people over age 64 have Medicare coverage for hospital and physician visit costs. At the time of the survey, prescription drugs were not covered by Medicare, and an age-related rise in the proportion of medi- cal out-of-pocket expenditures devoted to drugs was seen, at least until age 85 (Figure 1-10). Medical spending by the elderly varies widely. One study using HRS data from 1998 found that in the 2 years prior to 1998, average out-of- pocket spending was about $2,022, but half the population spent less than $920, while 10 per- cent of the population spent more than $4,800 (Goldman and Zissimopoulos 2003). Medical out-of-pocket expenditures tend to be greatest near death, and can be a financial chal- lenge for a surviving spouse. A four-wave analy- sis of HRS data for non-institutionalized people who were age 70 and older in 1993 showed that medical out-of-pocket spending averaged approximately $6,000 in the last year of life— 40 percent to 50 percent higher than at other and between 10 percent and 18 percent for those in their final year of life. Nursing home and extended- hospital coverage would likely have little effect on poverty rates for those not near death, but could lower the medical out-of-pocket adjusted poverty rate by 17 percent for those in the last year of life. Effects of Unexpected Health Events Early HRS data indicated that over a 2-year period, respondents on the whole had a 5 percent chance of having a heart attack, stroke, or new cancer diag- nosis; a 10 percent chance of having a new chronic illness diagnosis; and a 3 percent chance of having an accidental injury. A “health shock,” or unexpect- ed health event, may represent a turning point for an individual and her/his family, particularly if the individual is nearing retirement age. To explore the implications of adverse health events on both short-term and longer-term labor force participation, one study followed the labor force behavior of HRS respondents through the points in old age (McGarry and Schoeni 2003). To put this into perspective, researchers compared out-of-pocket spending to annual income. The av- erage couple’s medical out-of-pocket expenditures were roughly 15 percent of annual income 5 to 7 years before the death of a spouse. The out-of- pocket expenditure share rose to about 25 percent 3 years before the death of a spouse and to 50 percent in the year before the spouse’s death. When calculation of poverty rates includes an adjustment for the high end-of-life medical out-of- pocket expenses, the rates rise steeply as a func- tion of spousal death. This type of analysis helps demonstrate the potential effects of proposals to revise current health programs. For example, HRS data suggest that expanding Medicare coverage to include prescription drugs and long-term care (nursing home and hospital) would significantly lower medical out-of-pocket spending. Prescription drug coverage would lower out-of-pocket-adjusted poverty by between 21 percent and 33 percent for people who were many years removed from death, Note: Data may not sum to 100% due to rounding.