Costs by Payer

Costs are calculated on the basis of three payers; government, private insurance and patients.

Private insurance includes medical, vision and long-term care insurance plan payments for medical expenditures and nursing care placements attributable to low vision.

Government payments include medical costs and long-term care costs paid by Federal and state insurance programs, government assistance programs, entitlement programs and tax revenue losses. The entitlement programs and tax losses are budgetary outlays to government but are not included in total costs because they are considered economic transfers, not costs.

Patient costs include all other costs to patients, their families and society not paid by other payers, including out of pocket medical costs, long-term care costs, other direct costs which include low vision aids, devices and adaptations, and productivity losses. Productivity losses include the costs of informal care for children and the elderly due to low vision, as well as the costs of reduced wages and reduced work force participation among adults.   Patient costs also include the social cost of deadweight loss due to allocative inefficiency resulting from transfer payments.

Currently, patients incur more than half of all costs, with government paying about a third and private insurance paying about 17% of total costs. As the baby-boomer generation ages into the Medicare program, costs will further shift from patients and private insurance to government. By 2050, government will pay more than 41% of costs while the burden paid by patients and private insurers will drop to 44% and 16%, respectively. When considering nominal costs, which account for cost and wage inflation, the share of total costs paid by patient will remain nearly constant, government costs will increase to 37% and private insurance payments will drop to less than 14% of total costs.

 

Figure 4.3.1. Projected Total Costs by Payer

Figure 4.3.1.Projected Total Costs by Payer
Figure 4.3.1. Projected Total Costs by Payer

 

Table 4.3.1. Projected Total Costs by Payer, 2014 $billions

 

Government Costs*

Insurance

Patients

Total*

2014

$47.4

$25.2

$74.9

$145.2

2032

$96.5

$40.6

$113.7

$247.1

2050

$154.3

$59.0

$165.2

$373.2

*Government Costs includes entitlement and transfer payments not counted in Total

 

Table 4.3.2. Projected Total Expenditures by Payer, Nominal $billions

 

Government Costs*

Insurance

Patients

Total*

2014

$48.9

$26.0

$78.0

$150.5

2032

$140.1

$58.7

$191.3

$384.6

2050

$264.1

$100.2

$363.6

$716.9

*Government Costs includes entitlement and transfer payments not counted in Total