BOSTON — More low-income seniors will get a break on how much they pay for health care next year under a plan tucked into the state’s $43 billion budget.
Seniors who earn up to 165% of the federal poverty level, or up to about $20,000 a year, will be eligible for Medicare savings programs that help reduce health care expenses and lower out-of-pocket costs under the changes included in the fiscal 2020 budget.
Now, seniors earning up to 135% of the federal poverty level, or $16,400, are eligible for the health care savings programs.
Gov. Charlie Baker’s plan, which sets aside $4 million in the current fiscal year, will leverage $100 million in federal Medicare funding to cover about 40,000 seniors, including 25,000 who are now eligible under the expanded savings program.
Funding for the program will increase to $7 million a year in subsequent years, according to the Baker administration.
“This will have a really big impact on seniors’ lives,” said Carolyn Villers, executive director of the Massachusetts Senior Action Council, an advocacy group. “We know that six out of 10 seniors in Massachusetts are having trouble making ends meet, and health care costs are one of the biggest expenses.”
Villers said advocates hope to expand the savings programs even further, backing a proposal to raise the eligibility to 200% of the federal poverty level over the next three years.
The Baker administration said the changes will reduce eligible seniors’ medical costs by thousands of dollars a year and help ease a “cliff” that low-income seniors now face when they turn 65 and age out of state-subsidized health insurance.
Roughly a third of low-income seniors in Massachusetts spend more than 20% of their income on health care, according to state data.
Massachusetts hasn’t adjusted eligibility levels beyond the federal standards since the savings program was created in 1966, senior advocates say.
At least 13 other states have taken similar steps to expand eligibility for the Medicare savings programs, according to the National Conference of State Legislatures.
Nationally, spending on health care for seniors has been increasing for decades and accounted for 34% of all health care expenditures in 2014, according to the Centers for Medicare and Medicaid Services.
Health care spending for people 65 and older was nearly $20,000 per person in 2014, more than five times higher than the spending per child, the agency said.
Out-of-pocket spending for those 65 and older was also higher than other age groups, at $2,925 per person in 2014, according to the agency.
State lawmakers also gave a green light to portions of Baker’s plan to reduce prescription drug costs through MassHealth, the state’s Medicaid program that serves 1.8 million residents.
Under the plan, the Executive Office of Health and Human Services is authorized to begin negotiating supplemental rebates with drug manufacturers to reduce the state’s drug costs.
State officials expect the changes will save Massachusetts’ Medicaid program an estimated $80 million in the first year alone.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites.