The Painful Out-of-Pocket Medicare Costs for Treating Cancer
Policy + Politics

The Painful Out-of-Pocket Medicare Costs for Treating Cancer

© Felix Ausin Ordonez / Reuters

Many patients freely admit that that the only thing more frightening than learning that they have cancer is seeing how much it will cost to undergo treatment.

A new study by researchers at Johns Hopkins University found that while there is a broad range of public and private health insurance that defrays medical and drug costs, huge out-of-pocket costs can be devastating to patients and force a major change in their lives.

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This is especially true for many elderly and disabled Americans on Medicare, who are required to pay annual out-of-pocket costs ranging from $2,116 to $8,115 – and that’s above and beyond what they pay in premiums for health insurance, according to the new survey.

Cancer is by far the costliest disease to treat, according to the researchers, especially in light of breakthrough or experimental treatments such as immunotherapy. At the same time, much of the out-of-pocket costs stem from what the researchers view as excessive hospitalization for treatment.

Lauren Hersch Nicholas, assistant professor of health policy and management at Johns Hopkins University’s Bloomberg School of Public Health, said in a statement accompanying the study that spending related to a new cancer diagnosis can quickly get out of hand, regardless of one’s health care coverage.

“The health shock can be followed by financial toxicity,” she said. “In many cases, doctors can bring you back to health, but it can be tremendously expensive and a lot of treatments are given without a discussion of the costs or the financial consequences.”

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The findings, published last week in the journal JAMA Oncology, were based on data from more than 1,409 Medicare-covered cancer patients interviewed between 2002 and 2012. The sample included a broad socioeconomic and ethnic range and accounted for differences in geography and environment.

Medicare, the federal health plan for over 55 million Americans, covers just 80 percent of outpatient health costs and charges co-payments of $1,000 for each hospital visit. Of those interviewed for the study, just 15 percent had Medicare alone. Roughly half had a supplemental or “Medigap” plan or were receiving employer-provided or retiree benefits. The rest were either enrolled in Medicare HMOs or received Medicaid or benefits from the Department of Veterans Affairs.

The average yearly out-of-pocket costs associated with a new diagnosis was as little as $2,116 for low-income Medicaid beneficiaries to $5,976 for those in a Medicare Advantage or HMO program, and as high as $8,115 for those with no Medigap or supplemental insurance.

Strikingly, patients who hadn’t purchased supplemental insurance reported average annual out-of-pocket costs of one quarter of their entire yearly income, while one in ten patients said the costs amounted to at least 63 percent of their annual income.

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The report offered several ideas for reining in cancer treatment costs.

One would be to impose a cap on annual out-of-pocket Medicare costs, similar to catastrophic coverage in private plans. But that would require congressional approval. House Speaker Paul Ryan (R-WI) and other GOP leaders are promoting ideas to revamp both Medicare and Medicaid to slow their long-term growth rate and control the debt, and Congress appears to be more interesting in cutting benefits than expanding on them.

Another idea would be for doctors to limit the costly hospitalization of cancer patients by performing common radiation and chemotherapy treatment outside of hospitals. The researchers found that inpatient hospitalizations accounted for between 12 and 46 percent of out-of-pocket cancer spending, depending on the type of insurance coverage.