Many Americans may find themselves without adequate retirement savings due to rising health care costs, limited Social Security funds, and debt—both personal and public.
Medicare & Medicaid
Medicare is a federal program that provides health care coverage to all individuals age 65 or older. We consider Medicare a High Risk program because it is large, complex, and has serious management challenges.
Health insurance protects individuals from the risk of financial hardship when they need medical care. Many Americans also have additional long-term care needs as they age. Medicare, Medicaid, and employer-sponsored or individual health care plans can all play a role in financing health care in retirement.
Medicaid, on the other hand, is an income-based program that provides health care coverage to low-income individuals and individuals who are aged or disabled. Its size, growth, and diversity present oversight challenges, which is why Medicaid is also on our High Risk list.
Other Health Care Plans
Many retirees rely on employer-sponsored health care benefits—either as their primary source of coverage or as a supplement to their Medicare coverage. Retirees without employer-sponsored health coverage (and who are not eligible for Medicaid) may purchase supplemental Medicare insurance (“Medigap”) or buy health insurance directly through the Patient Protection and Affordable Care Act.
However, the number of employers offering health benefits to retirees has declined considerably. And many employers that do offer health benefits have required workers and retirees to pay a higher share of out-of-pocket costs. Some employers have also recently introduced consumer-directed health plans—which trade lower premiums for significantly higher deductibles.
Medicaid provides long-term care to the most vulnerable populations, such as the elderly or disabled. We've reported that, on average, this type of care (managed care) costs less than at a nursing facility or other institution—and many people prefer it.
States are increasingly paying for long-term care through managed care programs. But states must structure the set, monthly rates for these programs in a way that minimizes costs and maximizes services. We also recommended better federal oversight of the data used to set payment rates for managed care programs, as well as better oversight of the effect these rates have on the quality of health care.
Additionally, better information on the long-term care workforce is needed. Our podcast discusses the types of services these workers provide, such as help with daily activities like eating and bathing.
Related GAO Reports
- Medicaid: CMS Needs Better Data to Monitor the Provision of and Spending on Personal Care Services
GAO-17-169, Feb 13, 2017
- Medicaid: Key Policy and Data Considerations for Designing a Per Capita Cap on Federal Funding
GAO-16-726, Sep 9, 2016
- Medicaid: Key Issues Facing the Program
GAO-15-677, Jul 30, 2015
- Retirement Security: Challenges for Those Claiming Social Security Benefits Early and New Health Coverage Options
GAO-14-311, May 27, 2014
- Medicaid: Demographics and Service Usage of Certain High-Expenditure Beneficiaries
GAO-14-176, Feb 19, 2014
- John Dicken
- Health Care Affordability