A new study from the University of California Los Angeles (UCLA) contains some good news for California insurers in the Medicare Advantage business, plus a decent chunk of Golden State seniors, not to mention taxpayers in the state and throughout the country.
However, it’s not all good news for California retirees—with data showing health care affordability remains a huge problem in the state.
Good news for insurers and taxpayers—and Medicare Advantage seniors
While opponents have voiced concerns that Medicare Advantage (MA) plans cost taxpayers too much relative to original Medicare fee-for-service (FFS) and lawmaker threats to MA plans have spooked some insurers, the study shows that in the Golden State, MA continues to be successful at keeping senior health care costs down.
Health care industry publication Becker's Payer Issues covered the data, which spans a ten year period from 2013 to 2023.
UCLA researchers found that average monthly health care costs in counties where more than 20 percent of eligible enrollees chose MA plans over FFS were about half what they were in counties with enrollment below that 20 percent mark ($269 compared to $481).
In addition, monthly health care cost increases were lower in counties with higher Medicare Advantage enrollment: Just an 11 percent increase over ten years, versus a 54 percent increase in counties with lower MA enrollment.
Becker’s pointed to one example from rural Amador County:
“[Medicare Advantage] enrollment in rural Amador County rose from 19.2 percent in 2013 to 28.6 percent in 2023. Over the same period, monthly healthcare costs for a single older adult dropped from $509 in 2013 to $287 in 2023, with those fluctuations closely tracking [Medicare Advantage] enrollment.”
Amador is not the only place where declines in health care costs for seniors were noted: The study shows the same trend for Kings, Santa Cruz, Tulare, and Yuba counties. All of those counties have more than 20 percent of eligible seniors enrolled in Medicare Advantage plans.
Bad news elsewhere: The gap between “official” poverty and real life
But data from the study isn’t all rosy: While there’s good news for MA plans, taxpayers, and seniors using Medicare Advantage directly, UCLA’s data also shows that from 2015 to 2023, the number of economically insecure elderly Californians living alone increased from 542,000 to 647,000, which is a 19 percent rise. Couples in two-person households experienced a 26 percent increase over the same period, rising from 362,000 to 458,000.
The reason for that spike is no mystery: Costs rose far faster than the federal threshold that determines eligibility for benefits.
The trend could mean higher tax bills for California businesses in the future to help lift seniors facing increased economic hardship.
In 2023, the federal poverty line (FPL) for a single renter was $14,580, while the California Elder Index (CEI) estimated basic annual expenses at $32,100, constituting a gap of $17,520. As UCLA’s Kathryn Kietzman, PhD, MSW, director of the UCLA CHPR Health Equity Program, puts it, the FPL is “an outdated measure based on food costs only,” missing housing, local price differences, and other essentials.
That disconnect matters. “By FPL measures, many older adults who struggle paying for very basic necessities are still considered economically secure,” said UCLA’s Imelda Padilla-Fraust. This means that programs designed to assist often exclude older adults. The CEI’s data consistently show that many elder adults need at least twice the FPL to be economically secure.
The cost drivers: Housing leads the pack
While health care costs continue to grab attention from policymakers, the single most oversized budget line item in California is housing. More than 42 percent of households with at least one adult aged 65 or older are cost-burdened, spending 30 percent or more of their income on housing. This places California last among states on this measure, according to America’s Health Rankings.
Zoom in further, and the picture sharpens. A 2024 policy brief from Justice in Aging found roughly six in ten elderly renter households are cost-burdened, and four in ten are severely cost-burdened, paying over half of their income for housing. Women over 75 living alone are hit hardest: 72 percent are cost-burdened, and 51 percent pay more than half of their income for rent.
Housing pressure also shows up in grim statistics beyond balance sheets. California’s Commission on Aging has documented steep growth in homelessness among older adults. From 2017 to 2022, the number of Californians over 65 accessing homelessness services rose by more than 166 percent.
The stakes: Retirees, not statistics
Behind every index point is a neighbor: The retired caregiver in Bakersfield juggling insulin and rising rent; the grandparent in San Jose splitting a meager Social Security check between groceries and internet for a grandchild’s homework; the widower in Stockton, still driving for extra cash.
The UCLA update provides leaders with a more comprehensive dashboard. California’s Master Plan for Aging provides a policy lane. Now, the challenge for businesses, health care stakeholders, and government officials is execution at speed and scale, before a yardstick built for another time decides who among the more senior residents can afford this one.
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