The picture looks grim for older Americans when it comes to health insurance

A new survey has found that almost 70 percent of older Americans in order to cover medical expenses in their later years, endorse the concept of individual health savings accounts.

This would mean in effect setting aside 1 percent of income to handle expenses not covered by Medicare, the federal health insurance program for people aged 65 or older.

The survey, titled 'Will You Still Need Me? - The Health and Financial Security of Older Americans', was conducted by the Commonwealth Fund.

John Rother, AARP's director of policy and strategy, says that the strong response from survey participants indicates that the idea is worth developing.

It was found in the survey that the majority of those interviewed would support being able to buy into Medicare before they turn 65.

It is a sad fact that many older Americans face a bleak future as they enter retirement, as not only do they often struggle with chronic health problems, their income is stagnant, health costs are rising and retiree health benefits are declining.

The 2,000 adults aged 50 to 70 who were interviewed for the survey, appreciated the gravity of the situation.

Of the survey participants, fifty-three percent of respondents who worked or had a working spouse said they would not have job-based health benefits when they retired.

According to the researchers, 12 million older adults are currently uninsured or have had histories of unstable coverage.

About a quarter of Medicare beneficiaries in the sample reported that they were uninsured before entering Medicare.

Twenty-four percent of adults aged 50 to 64 said they had not filled a prescription, seen a doctor or specialist, or had a medical test or follow-up treatment due to the costs involved.

More than one-third, 35 percent, said they had had a problem paying medical bills in the past year, or were still paying off medical debt from the last three years.

Naturally all of this is eroding confidence.

Only 15 percent of respondents aged 50 to 64 and 22 percent of those aged 65 to 70 felt they would have enough income and savings for retirement.

Almost two-thirds (63 percent) worried they would not be able to afford medical care in their later years.

The financial reserves needed to cover medical expenses are high.

Dallas Salisbury, president and CEO of the Employee Benefit Research Institute says an individual who lived to 80 would need about $108,000 in savings in order to cover all Medigap premiums,somebody living to 95, would need about $300,000, not including potential long-term care expenditures.

Rother says that individuals are increasingly facing the prospect of non-coverage, and the survey shows grounds for alarm.

Nearly half (48 percent) of respondents had retirement savings of less than $50,000, while 38 percent had savings of less than $25,000.

Sixty-nine percent of the respondents favored devoting 1 percent of their earnings to a Medicare health account to bridge insurance gaps in the future. This arrangement would not be the same as the proposed private investment accounts for Social Security.

Karen Davis, president of The Commonwealth Fund, says the money would be invested in government bonds, but it would be an individual account so the money that was set aside would be available for that individual.

There was popular support for such a program among respondents, and this was regardless of income, geographical region, health status and political affiliation.

In addition, 73 percent of adults aged 50 to 64 said they would be interested in buying into Medicare before their 65th birthday.

According to the researchers two-thirds of people in this age group suffer from at least one chronic health condition and many lack adequate insurance.

Depressingly, Rother also points out that the survey excludes the 70-plus population, which is a high-risk and high-use population in Medicare, and grim though the picture is, many of the findings here are an understatement of the problems.

He says people are searching for some solution that will give them greater economic security and address higher and higher health costs, and as Medicare becomes a high-deductible plan with cost-sharing now in the thousands of dollars per year, more flexibility and more creative ways are needed by allowing people to enroll early, to protect assets or by allowing them to save an extra 1 percent in special accounts.