DURHAM - Jake Smith, a man who's good for what he owes, sold his paid-off home of 33 years recently to settle about $15,000 in medical debt that wasn't covered by Medicare. Smith, 80, a retired truck driver who volunteered for the Navy at age 17, is among the more than one in 10 older Americans whose only medical insurance is basic Medicare. The federal program pays a portion of doctor and hospital bills, but leaves the rest to patients.

Out-of-pocket payments by Medicare recipients such as Smith will continue to climb as federal officials try to keep the giant program from consuming an ever larger share of government spending, health-care researchers say.

Jake Smith's wife, Christine, died of cancer last year. Selling the home they shared -- and moving to senior housing downtown -- was the only way he could catch up on the bills from doctors and Duke Hospital for her past care.

"I believe in paying what I owe," Jake Smith said at his small apartment on Crest Street. "Just as soon as they come in, I pay them."

Older people in North Carolina are increasingly faced with high out-of-pocket health-care costs even though they are covered by Medicare, the federal health-care insurance for seniors. State health-insurance counselors say the number of questions they receive about coverage under basic Medicare has more than doubled -- to more than 1,200 a month -- during the past three years.

"It's very shocking to people when they go on Medicare," said Gina Upchurch, executive director for Senior Pharmassist, a Durham nonprofit agency that helps older people with prescription drug costs. "You sort of have this view that 'This means my health care will be taken care of.' But once they get on Medicare, it's not all easy going from there on out."

In Smith's case, his wife's small pension from her days as a Duke employee put the couple over the eligibility limit for Medicaid, the federal health insurance for low-income and disabled people. But the Smiths couldn't afford a private policy to cover the gaps that Medicare leaves after its coverage maxes out. Such policies in North Carolina can annually cost less than $1,000 or more than $3,000 per person, depending on a range of factors.

"Medicare doesn't have an out of-pocket limit, and so people who don't have supplemental insurance -- a Medigap plan or something from a former employer -- can run up very high bills," said Paul Precht, policy director of the Medicare Rights Center in New York City.

"The 20 percent deductible that they pay for doctor visits is affordable, if you are talking about a primary-care visit," Precht said. "But if you have a lot of tests and treatment, that can run up in the thousands of dollars."

Older people with basic Medicare, plus a supplemental policy and a prescription drug plan, can still feel the pinch of out-of-pocket costs. Additional costs for this group are coming in 2009, including increases for people on Medicare's prescription drug plan, who already face possible out-of-pocket expenses of more than $4,000 each year.

"This is a very real issue, and as health-care costs rise, it will only get worse," said Jon Oberlander, a professor of health policy at the University of North Carolina at Chapel Hill. "Medicare has never covered all of beneficiaries' health-care costs; and with the premiums and cost-sharing, the bill can add up."

Medicare costs soar

When Medicare was created in 1965, about half of Americans over 65 had no health insurance, according to the Congressional Budget Office. The insurance was designed to protect Americans from the rising health-care costs of aging, costs that sometimes caused insurers to drop older people from coverage. In the decades since, the program has come to insure nearly every older American -- and to consume about 16 percent of federal spending.

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