Health care and prescription drug spending by seniors: spending for health care and for prescription drugs among seniors has increased over the 1980-97 period; the seniors who had insurance coverage in addition to Medicare, on average, spent more on health care and prescription drugs than those who had Medicare coverage only

Monthly Labor Review, March, 2003 by Jessie X. Fan, Deanna L. Sharpe, Goog-Soog Hong

Family type was associated with expenditures on out-of-pocket prescription drugs. Married-couple households spent more on prescription drugs, both in terms of dollar amount and budget share, compared with all other types of families. Seniors who were homeowners with a mortgage allocated less money to prescription drugs, compared with renters, probably because of their high budget share for housing. Compared with seniors living in the urban South, seniors living in the urban Northeast and in the urban West spent less money on prescription drugs, both in dollar amount and in budget share forms.

Insurance coverage and total health care expenditure. For seniors without additional health insurance coverage, the inflation-adjusted total dollar amount spent on health care decreased from 1980 to 1997, by about $19 per year, whereas the total budget share for health care also decreased by about 0.10 percent per year since 1980. (See table 4.) However, for seniors with health insurance coverage other than Medicare, both the dollar amount and the budget share for health care increased over the years, with those having a commercial Medicare supplement leading the way at about a $75 ($93.05 - $18.50) increase per year, followed by those with Blue Cross/Blue Shield and other types of commercial insurance at about a $68 increase per year. The increase in total expenditures on health care was the smallest for seniors with HMO coverage, at about $43 per year. Budget share followed a similar pattern, with seniors who had Blue Cross/ Blue Shield or commercial Medicare supplement coverage leading the way at 0.29 percent or 0.28 percent increase per year, followed by seniors with other types of commercial insurance at 0.25 percent per year, and those with HMO coverage at 0.11 percent per year.

For seniors, the higher the household after-tax income, the higher the total health care expenditure, holding insurance coverage and other household characteristics constant. However, total after-tax income had a negative relationship with the budget share for health care expenditure when other things were controlled. Age was positively correlated with a senior household's total out-of-pocket health care expenditure. Non-Hispanic Black and Hispanic seniors were found to spend less on health care, both in dollar amount and in budget share terms, compared with non-Hispanic White seniors. Seniors of other races were found to spend less on total health care expenditures, but not in terms of budget share. The results also show that total health expenditures were more of a burden to seniors with lower levels of education, but less of a burden to seniors with college or more education, compared with seniors who had a high school education.

Family size generally had a negative relationship with the budget share for health care, other things being equal. Compared with all other types of households, married-couple households spent more money on health care and allocated a higher budget share for such care, holding other things equal. Total out-of-pocket health care costs were less of a burden to seniors who were eligible for Medicaid, compared with those who were not; homeowners with a mortgage, compared with renters; and seniors who lived in the urban Northeast and urban West, compared with those living in the urban South. However, homeowners without a mortgage allocated a larger share of their total expenditure to health care than renters, other things being equal.