Medicare’s genesis was in response to crisis: before the program existed, 48 percent of Americans age 65 and older were uninsured and 56 percent paid their health care expenses fully out of pocket.¹ The sick, elderly, and disabled were at risk of impoverishment simply by getting basic health care. Medicare helped close this gap by covering the costs of medical care for older adults, as well as younger people with disabilities, providing a vulnerable population with significant financial and health security.

Despite the financial protections Medicare offers to seniors, the program leaves many older adults exposed to high health care costs. Medicare has significant cost-sharing requirements, including deductibles and, for people in the traditional program, coinsurance with no limit on out-of-pocket spending. Services that many older adults and people with disabilities often need, including long-term care, vision, hearing, and dental services, are not covered under traditional Medicare.

By comparing Medicare to other universal coverage programs in high-income countries, we can evaluate how the gaps in coverage are affecting spending and health outcomes. This issue brief examines out-of-pocket spending and the extent to which health care costs are an impediment to care for people age 65 and older in the United States and other high-income nations. While the survey asked about health care use during the COVID-19 pandemic, this analysis focuses on costs as an impediment to health care that was unrelated to the pandemic. The COVID-19 pandemic may have nonetheless influenced older adults’ survey responses and the scope of care they deemed to be necessary. The analysis relies on data from the Commonwealth Fund’s 2021 International Health Policy Survey of Older Adults, conducted between March and June of 2021. The survey included 18,477 community-dwelling adults age 65 and older in the U.S. and 10 other high-income countries.²

The Barrier Posed by High Out-of-Pocket Costs

What people pay out of pocket offers a window into how affordable health care is for older adults, many of whom live on fixed incomes and face financial challenges paying for care. In many high-income countries with national health insurance, older adults pay 5 percent of their income, or less, on health care costs. But in Australia, the United States, and Switzerland, older adults spend larger shares of their income on health care (Exhibit 1). While part of the difference in higher out-of-pocket spending in countries like Switzerland may be attributable to high average incomes, it also may be linked to needed services that are not covered by the health insurance system.

There is a better way for seniors