Jeremy Hobson: Well we are just six days away from the Congressional super committee’s deadline to come up with $1.2 trillion in deficit reduction. And one big target for cuts is Medicare, the federal health insurance program for Americans 65 and older. But the latest report from the Census Bureau shows finances for those citizens are getting worse — in large part because of rising medical costs. The poverty rate for the elderly is now almost 16 percent.
For more, let’s bring in Marketplace economics correspondent Chris Farrell. Good morning.
Chris Farrell: Good morning, Jeremy.
Hobson: So why are the elderly paying more for medical care if they’ve got Medicare to deal with that?
Farrell: Same reason you’re paying more for medical care, Jeremy. I mean, you have an employer-sponsored health insurance plan; lots of our listeners do. And yet those costs keep going up. It’s rising Medicare payments, it’s higher deductibles, the expenses of prescription drugs. And for example, Medicare does cover a lot, but for certain services, there’s a 20 percent co-pay. And you know, if you have a bigger bill, that 20 percent absorbs more of your income.
Hobson: Is poverty among the elderly getting worse at a faster pace than it is for the rest of the population?
Farrell: This comes out of the new measure to try and get a better understanding of poverty and the dynamics of poverty in our economy. And what’s striking about this new comprehensive measure that the government statisticians came up with is that the impact of medical care on the elderly — which you know, makes sense because as you get older, your body starts to do less well, you get sick, your eyes deteriorate, your hearing deteriorates — so you spend a lot of money on medical bills, and that’s why we saw a doubling, a near-doubling of the poverty rate among the elderly. Whereas among children, the poverty rate actually shrank because they use less medical services.
Hobson: Well why is this happening? This was a big triumph of the New Deal to reduce poverty among the elderly. Why are we moving in the wrong direction now?
Farrell: I think it really reflects the problems that are embeddeded in our health care system, rising medical inflation. But I’m really worried taking a look longer-term, because let’s say you’re going to retire in five years, you’re retiring in 15 years. You look at current trends, and people haven’t saved that much for their retirement. And the trend with the super committee and the atmosphere in Washington is that we have to reduce these benefits, so people are going to be told, ‘you have to spend more on your medical care.’ And my question is: With what money?
Hobson: Marketplace economics correspondent Chris Farrell. Thanks so much, Chris.
Farrell: Thanks a lot.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.