Contact DHS

Division of Aging and
Adult Services
PO Box 1437
Slot 1412
Little Rock AR 72203

By Herb Sanderson, Director
Division of Aging & Adult Services

This column appears in the July 2001 edition of Aging Arkansas,
a publication of the Arkansas Aging Foundation and the
DHS Division of Aging and Adult Services

A few weeks ago I was attending a Legislative meeting at the State Capitol. A presentation was being made on the uninsured. A legislator asked a question about the adequacy of insurance for older Americans. The "expert" testifying said, “They are covered by Medicare.” End of discussion about older folks.

It is a myth all older people have adequate health care benefits.

This is well documented by the Kaiser Family Foundation Commission on Medicaid and the Uninsured, which has issued a series of reports that explore Medicare, Medicaid and the uninsured. The reports document the fact more than two in five Medicare beneficiaries (45%) are poor or low-income, limiting their ability to afford supplemental insurance or pay for services out-of-pocket. These individuals are the “permanently poor.” They have little potential for extra earnings.

Medicare pays only 52 percent of the health care cost of beneficiaries. It is easy to understand why. Medicare does not cover eye care, foot care, dental care, or prescription drugs — services older people routinely use. Medicare pays less than 3% of nursing home costs.

The most impoverished among the elderly qualify for Medicaid. Those with both Medicare and Medicaid benefits are well protected. But, even some of these individuals must still pay for some prescription drugs and all over the counter medications.

The affluent can by the best Medigap insurance. Retirees with employer-sponsored health benefits fare pretty well too. However, the prevalence of retiree health benefits sponsored by large employers declined from 80% in 1991 to 67% in 1998.

The elderly who are poor, but don't qualify for Medicaid, fall through the cracks.

Many believe all poor older people qualify for Medicaid. That is not true. Medicaid eligibility is based on Social Security Supplemental Security Income, or SSI for short. To qualify for SSI an individual age 65+ cannot have an income of more than $550 per month (the first $20 of income is excluded). The poverty rate for an individual age 65+ is $716 per month.
Those individuals with incomes between $550 and $716 per month are defined as poor by the government, yet they are not eligible for Medicaid. In 1995, Medicaid covered only 42% of people age 65 and older with family incomes below 100% of poverty.

Besides income, SSI also applies a “resource” test for eligibility. Resource limits are $2,000 for individuals and $3,000 for couples. These limits are generally applied to “liquid assets” such as cash and savings. Excluded, in whole or part, are assets such as homes, cars and burial insurance.

While the poverty rates and SSI eligibility rates are adjusted each year for inflation, the resource limits have not changed since the mid-1980s.

What does all this mean? Dual eligibles, those covered by both Medicare and Medicaid, are well protected. They spend just 4 to 8 percent of their incomes on out-of-pocket medical expenses. Affluent beneficiaries spend just 10 percent of their income on health care. On the other hand, elderly Medicare beneficiaries with incomes below 200 percent of the poverty level and no other source of insurance, spend between 22 and 35 percent of their incomes on out-of-pocket medical expenses. This according to a study by AARP and the Lewin Group.

The disparity in out-of-pocket expenses prevents poor Medicare-only beneficiaries from accessing health care. Due to costs, they are less likely than those with supplemental insurance to have a usual source of care and more likely to delay getting care. They are less likely to have a physician visit than other beneficiaries are.

States have the option to extend Medicaid various populations. Arkansas, like many other states, has expanded Medicaid coverage for children and pregnant women. States can expand coverage for poor elderly. Congress has given the states the option to extend Medicaid benefits to aged individuals with incomes up to 100 percent of poverty. Twelve states and the District of Columbia have elected to extend coverage. As a result of the tobacco settlement, next year Arkansas will increase coverage from 73% of poverty to 80% of poverty. If funds allow, coverage will eventually be extended to all elderly in poverty. However, the asset limits remain in place.

This would be particularly beneficial to women. Compared with men, older women are three times likelier to be widowed and far more apt to live alone. Seven in ten Medicare beneficiaries with incomes below poverty are women.

While Medicare is an important program for older people, its coverage is limited. And in the majority of states, an older person can still be poor, and not qualify for Medicaid. As discussions continue on health care, these individuals should not be forgotten.