At a glance
In many states, low‑income adults with full Medicaid lose affordable coverage when they move to Medicare at age 65.
A study of Medicare Savings Programs from 2006 to 2019 shows that raising income limits for eligibility improves coverage by up to 65 percent.
Newly covered adults in two states filled more prescriptions, especially for chronic conditions, and their out-of-pocket drug costs dropped sharply.
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For many low‑income Americans, turning 65 — the age at which Medicare coverage begins — is supposed to bring security.
But for people whose incomes fall in a particular range, between 1 and 1.38 times the federal poverty level, that birthday can instead mean instantly losing most of their Medicaid coverage and facing new costs under Medicare that they can’t afford — often just as chronic illness and prescription needs intensify.
Some states have explored ways to bridge this gap, sometimes referred to as the “Medicaid-Medicare cliff,” by expanding Medicare Savings Programs (MSPs) — state-run programs that help low-income Medicare beneficiaries with monthly premiums and out-of-pocket costs such as deductibles and copays.
Harvard Medicine News spoke with Joseph Newhouse, the John D. MacArthur Research Professor of Health Policy and Management in the Blavatnik Institute at Harvard Medical School and senior author of a recent study published in Health Services Research, about the coverage cliff, how MSPs are meant to fill it, and what evidence the study found on the efficacy of these programs.
The stakes are personal, as well as societal. Beneficiaries who can’t afford their share of the bill often skip doctor visits or go without medication, which can let manageable chronic conditions turn into emergencies, with consequences for patients, families, and a health care system that ultimately bears the cost of delayed care.
Harvard Medicine News: Let’s start with the cliff. What happens when some low-income people move from Medicaid to Medicare?
Joseph Newhouse: For people under 65, through the Affordable Care Act (ACA), many states expanded Medicaid to up to 138 percent of the federal poverty level — roughly one and a half times the official poverty line — so people in that income range could have Medicaid with very little or no out-of-pocket spending. However, Congress didn’t extend that same expansion to people over 65, largely because Medicaid is also the main payer for long-term nursing home care and broadening that would have been very expensive.
So, if your income is between 100 percent and 138 percent of the poverty level, you can be fully covered by Medicaid at 64 — and then at 65, in many states, you lose Medicaid, move onto Medicare, and suddenly face new bills for premiums, deductibles, and coinsurance that you may not be able to afford. You have insurance through Medicare, but you’ve lost the financial protection you had with Medicaid.
That’s the cliff. For these individuals, at 64, Medicaid is paying almost everything. Then, instantly at 65, there’s a real gap in coverage.
HMNews: How are Medicare Savings Programs supposed to help with that gap?
Newhouse: They’re aimed at people who don’t meet their state’s full Medicaid limits but still have very low incomes. Medicare Savings Programs let state Medicaid programs step in and help with Medicare’s bills, even when someone is not eligible for full Medicaid.
For the main group we studied, those supported by the Qualified Medicare Beneficiaries (QMB) program, MSPs pay the Part B premium and cover Medicare’s cost sharing — the deductibles and the usual 20 percent of the bill that patients would otherwise pay for many services. On top of that, qualifying for an MSP generally triggers automatic enrollment in the Part D Low-Income Subsidy, which sharply cuts drug premiums and copays.
So, for someone right at the cliff, an MSP can be the difference between having almost no out-of-pocket costs at all and facing real barriers to seeing a doctor or filling a prescription.
HMNews: What did the study look at?
Newhouse: We looked at four states — Connecticut, Indiana, New York, and Oregon — that changed their MSP eligibility rules between 2006 and 2019, with enough data before and after each change to study it properly.
States can expand MSP eligibility two ways: by raising the income limit or by eliminating the asset test. The federal asset limit has historically been quite low and is administratively complicated. An asset test means states look not only at your income but also at what you own — for example, money in the bank or other property — to decide if you qualify. It requires documenting bank accounts, cars, and other property, not just income. It has risen over time, though. As of 2025, it’s $9,660 in countable assets for an individual and $14,470 for a couple.
In our study period, Connecticut raised its income limit and eliminated the asset test, Indiana raised its income limit only, and New York and Oregon eliminated the asset test but left income limits unchanged.
HMNews: When states changed their MSP rules, what happened to enrollment?
Newhouse: The clearest finding was in the value of income limits versus the asset test. In Connecticut and Indiana, which raised income limits, enrollment rose substantially — about 65 percent above what we’d have expected in Connecticut and about a third higher than expected in Indiana. In New York and Oregon, which only dropped the asset test, enrollment rose just a few percent.
Part of that is simple. Raising the income ceiling instantly makes more people eligible. But I also suspect that many low-income people already have very few assets. A 2025 Federal Reserve survey found that more than a third of American adults would struggle to cover an unexpected $400 expense using cash or savings alone. People in that situation are already comfortably under the asset limit, even today’s higher one, so raising it doesn’t add many newly eligible people.
Asset tests are also just hard to navigate. Under the ACA, people under 65 on Medicaid do not have to complete an asset test; they are eligible based upon income only. Then at 65, they hit a new program with different rules, and they’re told assets matter again and have to be documented. Just knowing the program exists, and getting through that paperwork, is a real barrier. So, it’s not surprising that loosening income rules had a much bigger effect on enrollment than tinkering with the asset test.
HMNews: Once people gained MSP coverage, what changed in their access to care?
Newhouse: The strongest, most consistent impact was on prescription drugs. In Connecticut and Indiana, newly enrolled people filled more prescriptions overall, especially medicines for chronic conditions like diabetes medications, antidepressants, and lipid-lowering drugs. That’s exactly what you’d expect once drug cost sharing drops sharply, and in this population, almost everyone is on some medication, so we had the statistical power to see that outcome clearly.
We also saw fewer hospitalizations in both states and fewer emergency department visits in Indiana. I’d treat those findings a bit more cautiously than the drug findings, though. People sometimes qualify for this kind of help right around a hospital stay — a hospital social worker helps them apply, for instance — so part of the apparent decline may reflect people returning to their normal pattern of care rather than a pure effect of better coverage.
Office visit rates, for what it’s worth, didn’t change in any clear way in either state. The clearest message remains that expanding MSPs improves access to needed medications for people who might otherwise cut back.
HMNews: What’s the main takeaway, both for policymakers and for clinicians on the ground?
Newhouse: From a policy perspective, our work shows that minimizing cost sharing and premium burdens really matters for this group. If you’re living on a very limited income, every co-pay is a decision point. Should I go to the doctor, fill my prescription, or pay the rent? This study shows that when states soften the Medicaid-Medicare cliff with MSPs, especially by raising income limits, people enroll and respond exactly as you’d hope. They fill more of their needed prescriptions.
For clinicians, it’s worth asking whether your older low‑income patients might qualify for an MSP or the low‑income drug subsidy and connecting them to someone who can help with the application process.
For patients and families, it’s worth asking explicitly about these programs rather than assuming that high Medicare bills are inevitable when you move off Medicaid.
Help exists, but people often don’t know it, or they can’t easily access it.
This interview was edited for length and clarity.
Authorship, funding, disclosures
Vicki Fung, HMS associate professor of medicine at Massachusetts General Hospital, is first and corresponding author on the study. Additional co-authors include David Cheng, Mary Price, Kobi Khong, Zhiyou Yang, Felippe Marcondes, J. Wyatt Koma, John Hsu, and Margarita Alegria.
This study was supported by a grant from the National Institute on Minority Health and Health Disparities (5R01MD017068).
