Almost Half of Medicare Patients Can’t Afford a Single Hospital Stay

Americans who rely on Medicare to pay for hospital stays are often unable to pay the cost of the standard deduction, sometimes producing a financial shock.
Researchers at the University of Pennsylvania Perelman School of Medicine found that almost half of such patients have insufficient funds to pay the $1,600 payment, the standard out-of-pocket cost.
However, the financial burden extends far beyond just the poorest Americans. “Many Medicare beneficiaries with modest incomes are at risk for financial hardship from costs of a single hospital stay,” the researchers wrote.
Patients must prove that their income is at or below the federal poverty level—currently set at $15,060 for individuals and $20,440 for couples in 2024. There are also asset limits of $2,000 for individuals, and $3,000 for couples.
However, some states have set higher thresholds, extending Medicaid limits to 138 percent of the federal poverty level.
Additionally, access to full Medicaid benefits, including long-term care, depends on income criteria that varies by state—typically ranging from 75 to 100 percent of the federal poverty level.
The findings come from an analysis of the Health and Retirement Study of 2018, the nation’s largest social science and behavioral research project focused on aging Americans. Launched in 1992 by academic researchers and government social scientists, this biennial study has informed thousands of journal articles, books, and congressional reports.
Among the 4,881 beneficiaries included in the Medicare study, 45 percent lacked sufficient funds in their checking and savings accounts to pay the Medicare hospital deductible.
“A common reaction is to expand insurance policies or government programs to cover an ever-growing range of medical costs,” said Savage, a member of Samaritan Ministries Inc., a group whose members share medical expenses.
“However, this approach would increase the cost of coverage, thus, diverting more of the patients’ limited resources toward taxes and insurance premiums, and ultimately, depriving them of the funds they could have used for direct medical expenses.”
“The real issue, however, is why Americans remain so unprepared for medical expenses when they inevitably arise,” Savage added. “A legislative solution to address this could involve incentivizing proactive savings for medical costs that will inevitably occur as part of life.”
“By creating incentives for Americans to contribute to Health Savings Accounts (HSAs) or Medical Savings Accounts (MSAs), they could gradually build up funds to cover out-of-pocket expenses for their own medical care when needed,” he said.