Indicator 28: Use of Health Care Services
Most older Americans have health insurance
through Medicare. Medicare covers a variety of services, including inpatient
hospital care, physician services, hospital outpatient care, home health care,
skilled nursing facility care, and hospice services. Utilization rates for many
services change over time because of changes in physician practice patterns,
medical technology, Medicare payment amounts, and patient demographics.
Between 1992 and 1999 the hospitalization rate increased
from 306 hospital stays per 1,000 Medicare enrollees to 365 per 1,000. The
hospitalization rate remained essentially the same in 2000 and 2001. The
average length of a hospital stay decreased from 8 days in 1992 to 6 days in
Skilled nursing facility stays increased significantly from 28 per 1,000 Medicare enrollees in
1992 to 69 per 1,000 in 2001. Nearly all of the increase occurred from 1992 to
The number of physician visits and consultations also
increased. There were 11,359 visits and consultations per 1,000 Medicare
enrollees in 1992, compared with 13,685 in 2001.
The number of home health care visits per 1,000 Medicare
enrollees increased rapidly from 3,822 in 1992 to 8,227 in 1997. Home health
care use increased during this period in part because of an expansion in the
coverage criteria for the Medicare home health care benefit.52
Home health care visits declined after 1997 to 2,295 in 2001. The decline
coincided with changes in Medicare payment policies for home health care
resulting from implementation of the Balanced Budget Act of 1997.
Use of skilled nursing facility and home health care
increased markedly with age. In 2001, there were 26 skilled nursing facility
stays per 1,000 Medicare enrollees age 65-74, compared with 203 per 1,000
enrollees age 85 and over. Home health care agencies made 1,082 visits per
1,000 enrollees age 65-74, compared with 5,475 per 1,000 for those
age 85 and over.
Data for this indicator can be found in Tables 28a and 28b.
Indicator 29: Health Care Expenditures
Older Americans use more health
care than any other age group. Health care costs are increasing rapidly at the
same time the Baby Boom generation is approaching retirement age.
After adjusting for inﬂation,
health care costs increased significantly among
older Americans from 1992 to 2001. Average costs were substantially higher with
Average health care costs varied by demographic
characteristics. Average costs among non-Hispanic blacks were $13,081 compared
with $11,032 among non-Hispanic whites and $8,449 among Hispanics. Low income
individuals incurred higher health care costs; those with less than $10,000 in
income averaged $14,692 in health care costs whereas those with more than
$30,000 in income averaged only $8,855.
Costs also varied by health status. Individuals with no
chronic conditions incurred $3,837 in health care costs on average. Those with
five or more conditions incurred $15,784. Average
costs among residents of nursing homes and other long-term care institutions
were $46,810 compared with only $8,466 among community residents.
Access to health care is determined by a variety of
factors related to the cost, quality, and availability of health care services.
The percentage of older Americans who reported they delayed getting care
because of cost declined from 10 percent in 1992 to 5 percent in 1997 and
remained relatively constant thereafter. The percentage who reported
difficulty obtaining care varied between 2 percent
and 3 percent.
Health care costs can be broken
down into different types of goods and services. The amount of money older Americans
spend on health care and the type of health care that they receive provide an
indication of the health status and needs of older Americans in different age
and income groups.
Hospital and physician services were the largest components
of health care costs. Nursing homes and other long-term care institutions
accounted for 17 percent of total costs in 2001. Prescription drugs accounted
for about 11 percent of health care costs.
The mix of health care services changed between 1992 and
2001. Inpatient hospital care accounted for a lower share of costs in 2001 (27
percent compared with 33 percent in 1992). Prescription drugs increased in
importance from 7 percent of costs in 1992 to 11 percent in 2001.
'Other' costs (short-term institutions, hospice services, and
dental care) also increased as a percentage of all costs (from 4 percent to 8
The mix of services varied with age. The biggest
difference occurred for nursing home and long-term institutional services;
average costs were $6,968 among people age 85 and over, compared with just $516
for those age 65-74. Costs of home health care and
'Other' services also were higher at older ages. Costs of
physician/outpatient services and prescription drugs did not show a strong
pattern by age.
Data for this
indicator’s charts and bullets can be found in Tables 29a, 29b, 29c, 29d,
and 29e on pages 101-103.
Data for this indicator can be found in Tables 29a, 29b, 29c, and
Indicator 30: Prescription Drugs
Prescription drug costs have increased
rapidly in recent years, as more new drugs have become available. Lack of
prescription drug coverage creates a financial hardship for many older
Americans. Medicare currently does not cover most outpatient prescription
drugs, although Medicare-approved prescription drug discount cards have
recently become available. Medicare coverage of prescription drugs will begin
Average prescription drug costs for older Americans
increased rapidly throughout the 1990s, especially after 1997. Average costs
per person were $1,340 in 2000.
Average out-of-pocket costs also increased, though not as
rapidly as total costs because more Medicare enrollees had supplemental drug
coverage. Older Americans paid 60 percent of prescription drug costs out of
pocket in 1992, compared with 42 percent in 2000. Private insurance covered 35
percent of prescription drug costs in 2000; public programs covered 23 percent.
Costs varied significantly
among individuals. Approximately 9 percent of older Americans incurred no
prescription drug costs in 2000. Conversely, over 17 percent incurred
prescription drug costs of $2,000 or more in that year.
of prescription drugs varies significantly by
individual characteristics, including whether the person has prescription drug
coverage. Those with multiple chronic conditions tend to be especially heavy
users of prescription drugs.
The average number of filled
prescriptions for older Americans increased from 18 prescriptions in 1992 to 30
prescriptions in 2000.
Use of prescription drugs was much higher for individuals
with multiple chronic conditions. People with no chronic conditions averaged 10
filled prescriptions in 2000; those with 5 or
more conditions averaged 57 prescriptions.
Prescription drug coverage was associated with a higher
level of prescription drug use. In 2000, older Americans with prescription drug
coverage averaged 32 filled prescriptions;
those without drug coverage averaged 24 prescriptions.
Lower income individuals used more prescription drugs.
Those reporting an income of $10,000 or less in 2000 averaged 33 filled prescriptions; those reporting an income of
$30,001 or more averaged 26 prescriptions.
Prescription drug coverage was lower among older age groups,
ranging from 79 percent of people age 65-74 to 72 percent of those
age 85 and over. Medicare enrollees with incomes of $10,001-$20,000 had
the lowest percentage with coverage (73 percent). The lowest income group (less
than $10,001) had a slightly higher percentage with coverage (77 percent)
because of eligibility for Medicaid.
Data for this indicator can be found in Tables 30a, 30b, 30c and
Indicator 31: Sources of Health Insurance
Nearly all older Americans have
Medicare as their primary source of health insurance coverage. Medicare covers
mostly acute care services and requires beneficiaries
to pay part of the cost, leaving about half of health spending to be covered by
other sources. Many beneficiaries have supplemental
insurance to fill these gaps and to obtain
services not covered by Medicare.
- Most Medicare enrollees have a
private insurance supplement, about equally split between
employer-sponsored and Medigap-type policies.
About 10 percent have Medicaid, and about 10 percent have no supplement.
Enrollment in Medicare HMOs, which are usually equivalent to Medicare
supplements because of their benefit
structures, varied from 6 percent to 21 percent.
- HMO enrollment increased rapidly
throughout the 1990s, then decreased beginning in
2000, as many HMOs withdrew from the Medicare program. The percentage with
Medigap policies decreased in the late 1990s,
then increased as enrollment in HMOs declined. The percentage of Medicare
enrollees without a supplement was relatively constant but increased
slightly in 2002 to 12 percent.
almost all older Americans have health insurance via Medicare, a significant proportion of people younger than age 65
have no health insurance. In 2002, 12 percent of people age 55-64 were
uninsured. The percentage of people under age 65 not covered by health
insurance varies by poverty status. In 2002, 28 percent of people age 55-64 who
lived below the poverty level had no health insurance compared to 7 percent of
people who had incomes greater than or equal to 200 percent of the poverty
Data for this indicator can be found in Tables 31a and
Indicator 32: Out-of-Pocket Health Care Expenditures
expenditures for health care service use have been shown to encumber access to
care, affect health status and quality of life, and leave insufficient
resources for other necessities.53,54 The
percentage of household income that is allocated to health care expenditures is
a measure of health care expense burden placed on older people.
The percentage of people age 65 and over with
out-of-pocket spending for health care services increased between 1977 and 2001
(83 percent to 95 percent, respectively).
From 1977 to 2001, the percentage of household income
that people age 65 and over with out-of-pocket spending allocated to
out-of-pocket spending for health care services increased among those in the
poor/near poor income category, from 15 percent to 22 percent. Out-of-pocket
spending allocations also increased among people in the poor/near poor income
category age 65-74 and 75-84 and among people in the other income category age
65-74, 75-84, and 85 and over. Increases were also seen for those in poor or
fair health age 65-74 (from 10 percent in 1977 to 13 percent in 2001).
In 2001, people age 85 and over were less likely than
people age 65-74 to spend out-of-pocket dollars on dental services or office-based medical provider visits but more likely
to spend out-of-pocket dollars on other health care (e.g., home health care and
eyeglasses). Fifty-six percent of out-of-pocket health care service spending by
people age 65 and over was used to purchase prescription drugs.
Data for this
indicator’s chart and bullets can be found in Tables 32a, 32b, and 32c on
for this indicator can be found in Tables 32a, 32b, and 32c.
Indicator 33: Sources of Payment for Health Care Services
Medicare covers about half of
the health care costs of older Americans. Medicare’s payments are focused
on acute care services such as hospitals and physicians. Nursing home care,
prescription drugs, and dental care are primarily financed
by other payers.
Medicare pays for slightly more than one-half (54
percent) of the health care costs of older Americans. Medicare finances most of their hospital and physician costs,
as well as a majority of short-term institutional, home health, and hospice
Medicaid covers 10 percent of health care costs of older
Americans, and other payers (primarily private insurers) cover another 15
percent. Older Americans pay 21 percent of their health care costs out of
Forty-six percent of nursing home costs for older
Americans are covered by Medicaid; another 48 percent of these costs are paid
out of pocket. Forty-seven percent of prescription drug costs are covered by
third party payers other than Medicare and Medicaid, consisting mostly of
private insurers. Forty-one percent of prescription drug costs are paid out of
pocket. About 80 percent of dental care received by older Americans is paid out
Sources of payment for health care vary by income. Lower
income individuals rely heavily on Medicaid; those with higher incomes rely
more on private insurance. Lower income individuals pay a lower percentage of
health care costs out of pocket but use more services than individuals with
for this indicator can be found in Tables 33a and 33b.
Indicator 34: Veterans Health Care
The number of veterans age 65
and over who receive health care from the Veterans Health Administration (VHA),
within the Department of Veterans Affairs (VA), has been steadily increasing.
This increase may be because VHA fills
important gaps in older veterans’ health care needs not currently covered
or fully covered by Medicare, such as prescription drug benefits,
mental health services, long-term care (nursing home and community-based care),
and specialized care for the disabled.
In 2003, approximately 2.3 million veterans age 65 and
over received health care from VHA. An additional 1 million older veterans were
enrolled to receive health care from VHA but did not use its services that
Reforms and initiatives implemented by VA since 1995 have
led to an increased demand for VHA health care services despite the short-term
decline in the number of older veterans (see 'Indicator 6: Older
Veterans'). Some of those changes include: opening the system to all
veterans (1995); implementing enrollment for VHA health care (1999); and
reducing inpatient care with increased access to outpatient care and other
An increasing number of older veterans are turning to VHA
for their health care needs despite their potential eligibility for other
sources of health care. VHA estimates that 91 percent of its patients age 65
and over are covered by Medicare Part A, 83 percent by Medicare Part B, 48
percent by Medigap, 8 percent by Medicaid, 14 percent
by private insurance (excluding Medigap), and 7
percent by TRICARE for Life. About 4 percent have no public or private coverage
Data for this indicator can be found in Tables 34.
Indicator 35: Nursing Home Utilization
Residence in a nursing home is an
alternative to long-term care provided in one’s home or in other
community settings. Recent declines in rates of nursing home residence may reﬂect broader changes in the health care system
affecting older Americans. Other forms of residential care and services, such
as assisted living and home health care, have become more prevalent as rates of
nursing home admissions have declined.
In 1999, 11 people per 1,000 age
65-74 resided in nursing homes, compared with 43 people per 1,000 age 75-84 and
183 people per 1,000 age 85 and over.
The total rate of nursing home residence among the older
population declined between 1985 and 1999. In 1985, the age-adjusted nursing
home residence rate was 54 people per 1,000 age 65 and
over. By 1999 this rate had declined to 43 people per 1,000. Among people age
65-74, rates declined by 14 percent, compared with a 25 percent decline among
people age 75-84 and a 17 percent decline among the population age 85 and over.
Despite the decline in rates of nursing home residence,
the number of nursing home residents age 65 and over has been increasing
because of the rapid growth of the older population. Between 1985 and 1999 the
number of current nursing home residents age 65 and over increased from 1.3
million to 1.5 million. In 1999, almost three-fourths (1.1 million) of older
nursing home residents were women.
The percentage of nursing home residents receiving assistance
with functional limitations increased between 1985 and 1999. In 1985, 95
percent of all residents age 65 and over received assistance with one or more
activities of daily living (ADLs). In 1999, 97
percent of residents received such assistance.
Nursing home residents are receiving greater levels of
care and assistance. The majority of nursing home residents receive assistance
with 4-6 ADLs (77 percent in 1999). The increase in
receipt of assistance between 1985 and 1999 is greatest among residents receiving
this level of assistance.
Among the nursing home population, women are more likely
than men to receive assistance with daily activities. In 1999, 5 percent of men
who were nursing home residents did not receive assistance with any ADL. Less
than half that many women received no such assistance (2 percent). This gender
gap has narrowed over time, however. The increase over time in receipt of
assistance for 4-6 ADLs is greatest among men.
The latest data show few differences between Hispanics
and non-Hispanics in the level of care received with ADLs
and small differences between whites and blacks. Between 1985 and 1999,
declines in the percentage receiving care with 0 and with 1-3 ADLs occurred for both white and black residents. Increases
in the receipt of assistance occurred, however, for those requiring care with
4-6 ADLs―between 1985 and 1999, an increase of
8 percentage points for whites and 5 percentage points for blacks.
for this indicator can be found in Tables 35a, 35b, and 35c.
Indicator 36: Residential Services
Some older Americans living in
the community have access to various services through their place of residence.
Such services may include meal preparation, laundry and cleaning services, and
help with medications. Availability of such services through the place of
residence may help older Americans maintain their independence and avoid
In 2002, 2 percent of the Medicare population age 65 and
over resided in community housing with at least one service available.
Approximately 5 percent resided in long-term care facilities. The percentage of
people residing in community housing with services and in long-term care
facilities was higher for the older age groups; among individuals age 85 and
over, 7 percent resided in community housing with services, and 19 percent
resided in long-term care facilities. Among individuals age 65-74, 98 percent
resided in traditional community settings.
Among residents of community housing with services, 86
percent reported access to meal preparation services, 80 percent reported
access to housekeeping/cleaning services, 68 percent reported access to laundry
services, and 47 percent reported access to help with medications. These
numbers reﬂect percentages reporting
availability of specific services but not
necessarily the number that actually used these services.
More than half of residents in community housing with
services (53 percent) reported that there were separate charges for at least
People living in community housing with services had more
functional limitations than traditional community residents but not as many as
those living in long-term care facilities. Forty-five percent of individuals
living in community housing with services had at least one activity of daily
living (ADL) limitation compared with 28 percent of traditional community
residents. Among long-term care facility residents, 81 percent had at least one
ADL limitation. Thirty-seven percent of individuals living in community housing
with services had no ADL or instrumental activity of daily living (IADL)
The availability of personal services in residential
settings may explain some of the observed decline in nursing home use. (See
'Indicator 35: Nursing Home Utilization.')
Residents of community housing with services tended to
have slightly lower incomes than traditional community residents but higher
incomes than long-term care facility residents. Almost one-quarter (24 percent) of
residents of community housing with services had incomes of $10,000 or less in
2002, compared with 17 percent of traditional community residents and 43
percent of long-term care facility residents.
Over one-half (53 percent) of people living in community
housing with services reported they could continue living there if they needed
for this indicator can be found in Tables 36a, 36b, 36c, 36d, and 36e.
Indicator 37: Caregiving and Assistive Device
Although most long-term care
spending in the United States is for nursing home and other
institutionalized care, the majority of older people with disabilities live in
the community and receive assistance from spouses, adult children, and other
family members. Most of this care is unpaid, although an increasing number of
older Americans with disabilities rely on a combination of unpaid and paid
The percentage of older Americans who received personal care from a
paid or unpaid source for a disability declined from 15 percent in 1984 to 11
percent in 1999. The number of older Americans who received such care also
declined from 4.1 million to 3.7 million over this period.
The proportion of older people with disabilities
who received informal care, either alone or in combination with some formal
care, exceeded 90 percent in all 4 years, although this proportion declined
from 95 percent in 1984 to 92 percent in 1999.
The use of informal care as an exclusive means of
assistance declined between 1984 and 1994 from 69 percent to 57 percent and
increased to 66 percent in 1999. This upward shift between 1994 and 1999 in
reliance upon informal care only is accompanied by a decline in the use of both
informal and formal care from 36 percent in 1994 to 26 percent in 1999.
There was an increase in the proportion of older
Americans with disabilities who rely solely on formal care for their personal
assistance needs, rising from 5 percent in 1984 to 9 percent in 1999.
Possible reasons for the
decline in the use of long-term care in the community include improvements in
the health and disability of the older population, changes in household living
arrangements (e.g., the move toward assisted living and other residential care
alternatives), and greater use of special equipment and assistive devices that
help older disabled people living in the community maintain their independence.
The percentage of older Americans who either receive
personal care or use assistive devices for a disability declined from 17
percent in 1984 to 15 percent in 1999. This occurred even though the number of
these older Americans increased slightly from 4.7 million to 5 million over
Among older Americans who either receive personal care or
use assistive devices for a disability, the proportion of those using an
assistive device only increased from 13 percent to 26 percent while the
proportion of those receiving personal care only declined from 31 percent to 16
percent between 1984 and 1999.
Between 1984 and 1999, the proportion of people with
lower levels of disability (limitations in 1-2 ADLS or in IADLs
only) who were using assistive devices only increased
while the proportion receiving personal care only decreased. In 1984, 14
percent of those with IADL limitations only and 22 percent of those with 1-2
ADL limitations used an assistive device only. The corresponding percentages in
1999 were 31 percent and 44 percent, respectively.
Data for this indicator can be found in Tables 37a, 37b, and 37d.