Wither Medicare

With the Urban Institute, The Kaiser Family Foundation (KFF) reviewed the income, assets, and demographics of the current Medicare population in a report released earlier this year, Projecting Income and Assets: What Might the Future Hold For The Next Generation Of Medicare Beneficiaries?Key findings of the KFF and Urban Institute researchers include the following:

• Half of Medicare beneficiaries had incomes less than $21,000 in 2010; median per capita income is lower for black and Hispanic beneficiaries than for white beneficiaries and declines with age among seniors. Per capita income is highly skewed: less than 5% of beneficiaries have incomes of $83,000 or higher.

• Per capita income is projected to rise, but much of this growth is projected to occur at higher incomes (34% of whites with incomes at or above 600% of the poverty level in 2030, compared with 22% in 2010), leading to a wider income gap among the next generation of beneficiaries.

• Between 2010 and 2030, white beneficiaries will see greater gains in income than black or Hispanic beneficiaries (again, at the higher income levels) while the proportion of whites in the 200% to 599% of poverty income level (44%) will drop to equal approximately the same proportion of blacks (45%) and Hispanics (43%) at the same “middle income” level. However, the proportion of blacks and Hispanics with incomes below twice the poverty level in 2030 is projected to be 40% of those populations, compared to 22% of white beneficiaries.

• Half of all Medicare beneficiaries have less than $60,000 in home equity, half have less than $2,000 in retirement savings, and half have less than $30,000 in financial assets, but 5% have financial assets valued at more than $890,000.

• The average value of home equity was substantially higher for white than black or Hispanic beneficiaries in 2010; these differences are projected to persist for the next decades.

• White beneficiaries have significantly more in savings than black or Hispanic beneficiaries; the gap in savings is expected to widen by 2030. White Medicare beneficiaries are projected to have $471,353 in savings in 2030, more than four times the average savings projected to be held by black beneficiaries ($101,148) and more than three times the average savings projected to be held by Hispanic beneficiaries ($143,639).

“While a small share of the Medicare population lives on relatively high incomes, most are of modest means, with half of people on Medicare living on less than $21,000 in 2010,” the KFF report concluded. “The income and assets of Medicare beneficiaries overall are projected to be somewhat greater in 2030 than in 2010; yet, only a minority of the next generation of beneficiaries will have significantly higher incomes and assets than the current generation, with much of the growth projected to be concentrated among those with relatively high incomes. Racial disparities in both income and assets are projected to persist for the next decades.

“As policymakers consider options for decreasing federal Medicare spending and addressing the federal debt and deficit, this analysis raises questions about the extent to which the next generation of Medicare beneficiaries will be able to bear a larger share of costs.”