African Americans, who make up the third largest racial/ethnic group in the United States, are likely to have more chronic or serious health conditions and have significantly lower financial resources than White Americans. The guaranteed health coverage offered by Medicare, Medicaid and the Affordable Care Act (ACA) is, therefore, especially important to the African American community, which has a huge stake in protecting, improving and strengthening these programs.
There are over 47 million African Americans in the United States, accounting for approximately 13.4 of the total population. 5.7 million Medicare beneficiaries are African American, 10 percent of all beneficiaries.
African Americans on Medicare are significantly less well off than non-Hispanic Whites. In 2016, half of all people with Medicare lived on incomes of $26,200 or less per year and had savings of less than $74,450. However, the median income for African Americans was $17,350. African Americans also had significantly lower savings rates than Whites with median savings of $16,000 compared to $108,250 for Whites.
African Americans on Medicare are more likely to have serious health problems than Whites. In particular, African Americans have a higher risk than Whites for certain health conditions such as heart disease, hypertension and diabetes.
Medicare provides health insurance for most Americans when they reach age 65 or have been receiving Social Security disability benefits for 24 months.
Medicare has played a historically significant role for African Americans. Prior to the enactment of Medicare and Medicaid, hospitals were segregated. Medicare forced hospitals to desegregate by withholding federal funding from hospitals that practiced racial discrimination. Today, Medicare continues to play an important role providing income and health security to African Americans.
While Medicare’s guaranteed health care coverage is crucial to African Americans, it does not pay the full cost of hospital and doctor care, prescription drugs and other health services. Medicare beneficiaries must pay Medicare premiums, coinsurance and copayments, plus pay for health care services not covered by Medicare. Out-of-pocket costs are a burden for Medicare beneficiaries with low incomes and high health care needs, including many African Americans who are more likely to be in poorer health than Whites. Average out-of-pocket spending for those who self-report having fair or poor health is higher than for those who report having excellent or very good health.
The share of income Medicare beneficiaries spend on health care is significant. In 2016, beneficiaries spent an average of $3,024. Out-of-pocket costs are a great burden for those African Americans who depend on Social Security for all or most of their income in retirement.
Medicare Supplemental Coverage
Most Medicare beneficiaries have supplemental insurance to cover the gaps in Medicare. Forms of supplemental insurance include employer-sponsored retiree health insurance and private supplemental insurance known as Medigap. Medicaid also provides supplemental coverage to low-income Medicare beneficiaries. However, African Americans are less likely to have supplemental insurance and more likely than Whites to have only traditional Medicare. In addition, they are much less likely than Whites to have employer-provided retiree health benefits.
A larger percentage of African American beneficiaries than White beneficiaries are enrolled in private Medicare Advantage (MA) plans, which, unlike traditional Medicare, are run by private insurance companies. Medicare Advantage plans can combine the benefits of traditional Medicare, prescription drug coverage and supplemental insurance. Some seniors enjoy the convenience of combining all these benefits into one insurance plan. However, there are some potential downsides to enrolling in private plans: they can leave the market at any time or limit access to providers. Also, research indicates that beneficiaries leave private plans for traditional Medicare when they become sicker. There isn’t enough research to establish why this is so, but it may suggest that sicker seniors have a more difficult time accessing services under MA plans.
Affordable Care Act Improvements to Medicare
The Affordable Care Act (ACA) assists many older African Americans by providing Medicare preventive services and annual wellness visits with no out-of-pocket costs and by providing discounts on prescription drugs.
The ACA provides relief for people in the Medicare prescription drug coverage gap or donut hole. Prior to the ACA, beneficiaries had to pick up 100 percent of the costs with the donut hole. The ACA gradually closed the coverage gap, with beneficiaries having to pick up a declining percentage of costs for drugs they use while in the donut hole. In 2019 the donut hole will close for brand-name drugs and in 2020 it will close for generics. Once the donut hole closes, seniors will pay 25 percent of the costs of their drugs while their drug costs fall within the range of what used to be the coverage gap. For 2019, Medicare beneficiaries in the donut hole pay 37 percent of the cost of generic drugs and 25 percent of the cost of brand drugs.
Proposals to repeal Medicare benefit improvements in the Affordable Care Act and plans to shift costs to Medicare beneficiaries could be devastating to millions of seniors and people with disabilities. Requiring beneficiaries to pay more could lead many seniors to forgo necessary care, which could lead to more serious health conditions and higher costs. Benefit cuts and cost shifting would have a disproportionate effect on communities of color, including African Americans, given their lower incomes and poorer health.
The Low-Income Subsidy (LIS), also known as “Extra Help,” assists some low-income seniors with their Medicare Part D prescription drug costs. In 2019, seniors qualify for a subsidy if their income is less than $18,210 per year for a single person and $24,690 for a married person. To qualify, their assets – real estate other than primary residence, bank accounts, stocks, IRAs – must be less than $14,100 for a single person and $28,150 for a married person living with a spouse. The value of one’s home, car, burial plot, or life insurance does not count as an asset.
Medicaid, a joint federal and state program, provides health insurance to over 68 million low-income individuals in the United States. This includes coverage for seniors, people with disabilities, children and some low-income adults. Medicaid is an especially important source of health insurance for low-income African Americans.
In 2017, African Americans accounted for 20 percent of Medicaid enrollees. Medicaid is particularly important for African Americans who tend to be poorer on average, because it fills in coverage gaps in Medicare. Notably, Medicare only covers limited long-term services and supports. Medicaid provides more comprehensive coverage, but beneficiaries are required to impoverish themselves to become eligible. Medicaid funds more than half of all long-term care services and families and—to a lesser extent—private insurance fund the rest. Seniors who are fully eligible for Medicaid can also receive other benefits Medicare doesn’t cover, such as dental, vision and hearing care. Seniors who are partially eligible for Medicaid, through the Medicare Savings Program, can get help from Medicaid to pay for Medicare cost-sharing.
NATIONAL COMMITTEE POSITION
Medicare, Medicaid and the Affordable Care Act are vital to the essential health needs of African Americans. The National Committee believes additional education is necessary to ensure that all Americans are aware of improvements to Medicare’s preventive services and prescription drug coverage available to them under the Affordable Care Act. States are encouraged to expand their Medicaid programs because that would increase access to affordable health coverage for low-income Americans and help individuals better manage their chronic conditions. The National Committee opposes proposals to cut Medicare benefits, repeal or undermine the Affordable Care Act, and reduce federal funding of Medicaid; these measures would have a devastating impact on the well-being of millions of Americans and disproportionately affect communities of color, including African Americans.