Medicare Enrollees With Cancer Have High Out-of-Pocket Costs

Patients with cancer who have Medicare and no supplemental insurance — many who are elderly and disabled – spend, on average, about a quarter of their income on out-of-pocket medical costs. Some patients reported spending as high as 63 percent of their annual income to pay medical bills, according to a recent study conducted by the Johns Hopkins Bloomberg School of Public Health and Johns Hopkins Kimmel Cancer Center.

The survey-based study, “Out-of-pocket spending and financial burden among Medicare beneficiaries with cancer,” looked at 18,000 Medicare beneficiaries interviewed between 2002 and 2012 for the National Institute on Aging’s Health and Retirement Survey. During the study period, 1409 of the patients were diagnosed with cancer.

Of the patients studied, 15 percent had no supplemental insurance beyond their Medicare coverage; 50 percent had the Medigap plan or still had employer or retiree benefits; 20 percent participated in a Medicare HMO; 9 percent were eligible for Medicaid and 6 percent received benefits from the Veterans Administration (VA).

This study found that annual out-of-pocket costs for patients with Medicare ranged from $2,116 to $8,115 among patients with no supplemental insurance (not including the costs of paying for health insurance itself), depending on which, if any, supplemental health insurance the patient had.

Those with Medicaid in addition to Medicare saw an average annual out-of-pocket cost with a new diagnosis of cancer of $2,116. For those with benefits from the VA, the annual cost was $2,367. With employer-sponsored plans, costs jumped to $5,492. Patients with a Medigap plan had annual out-of-pocket costs of approximately $5,670. With Medicare HMOs, it was $5,976, and for those patients with no supplemental insurance of any kind the annual out-of-pocket costs with a new cancer diagnosis averaged at $8,115.

For those patients without supplemental insurance, the average costs were one-quarter of their annual income. For 10 percent of those patients, the costs were at least 63 percent of their annual income.

“Cancer costs are high,” said Amol K. Narang, M.D., coauthor of the study, “and a significant segment of our seniors who don’t have adequate insurance coverage can be hit hard by this.” Coauthor Lauren Hersch Nicholas, M.D., concurred: “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.”

The study also found that hospitalization was a major driver of out-of-pocket costs. The copay for each hospital visit is $1,000. For patients with cancer, inpatient hospitalization accounted for between 12 percent and 46 percent of out-of-pocket spending, depending upon whether or what type of supplemental insurance a patient had.

While some inpatient care can be necessary for surgical procedures and to handle more severe treatment side effects, the researchers suggested that clinicians could help avoid hospitalization. Common side effects could be handled with more intensive outpatient management. At the Kimmel Cancer Center, they have an urgent care clinic for this purpose, which has reduced hospitalization rates in patients undergoing cancer therapy. More research is needed to determine which hospitalizations are truly preventable, the researchers note.

“In addition to efforts aimed at lowering cancer costs,” Narang, an instructor in the Department of Radiation Oncology and Molecular Radiation Sciences at the Johns Hopkins University School of Medicine and member of Kimmel Cancer Center, stated. “We need to think about how to offer our seniors better insurance coverage.”

Currently, there are no caps on the amount a patient pays annually with Medicare. Some private plans do have this upper limit, called catastrophic coverage. One of the solutions the researchers offered was to establish a cap on annual out-of-pocket costs for patients with Medicare. This would require Congress to enact a reform.

“We should expect to spend some of our income on healthcare,” Nicholas, assistant professor in the Department of Health Policy and Management at the Bloomberg School, 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.”