Can Americans afford the health care services they need? That question is a big part of the current debate – from premium rates under the Patient Protection & Affordable Care Act (PPACA) to the proposed provisions in the recently released health care bill from the U.S. Senate. The answer depends on who you are talking about and how you frame the question. But I want to share some statistics that can help us to think about the question.
In the U.S., the broad population is generally covered by two systems – one for non-disabled people under 65 and the other people who are 65+. Today, I want to focus on the over-65 population.
For that population, according to a recent report from the United Health Foundation and Alliance for Aging Research, it is estimated that a couple will need $260,000 over the course of their lifetime (estimated to be 22 years) to pay for health care services not covered by Medicare. These costs include premiums for Medicare Part B (outpatient services) and Part D (pharmacy), premiums for any supplemental Medicare coverage, and out-of-pocket expenses for copayments, coinsurance, and non-covered goods and services. This estimate does not include the costs of long-term care. What is not entirely unexpected, but still surprising, is that about 62% of couples who are age 65 and retiring in 2017 lack the financial assets to cover that $260,000 in retirement health care costs (see 62% Of Current Retiree Couples Lack Resources To Cover Estimated $260,000 In Retirement Health Costs).
There were some other eye-catching statistics I found in the report:
- For a 45-year-old couple planning to retire in 20 years, retirement health care costs are projected at $590,000
- For a 55-year-old couple, costs are projected at $465,000
- For pre-retirees (ages 50 to 64), 75% have less in total retirement savings they will need
- A 65-year-old man with median prescription drug spending retiring in 2016 will need $127,000 and a 65-year-old woman will need $143,000 for future health care costs
Those are hefty numbers – but even experts disagree. Another study that came out last year estimated that a healthy 65-year old married couple retiring in 2016 will have average out-of-pocket health care costs of $395,000 over the next 20 years for Medicare premiums, copayments, and coinsurance (see Average Out-Of-Pocket Health Care Costs Estimated At $395,000 For A 65-Year-Old Healthy Couple Retiring In 2016).
I think of these numbers in parallel with the estimates with the average U.S. household savings amount – the median for all families in the U.S. is just $5,000 and the median for families with some savings is $60,000 (see Here’s How Much The Average American Family Has Saved For Retirement). According to a 2016 GOBankingRates survey, 69% of Americans have less than $1,000 in their savings accounts and 34% have no savings at all (see 69% of Americans Have Less Than $1,000 in Savings). Among households of people between ages 65 and 74 where at least one member is still in the workforce, about 19% have less than $2,000 in liquid savings (see More Than One-Third Of Workers Age 50 To 64 Have Less Than $2,000 In Liquid Savings).
The growing expectation for 65+ consumers to pay more of their health care costs, while the majority have fewer resources to do so, is a “mega-trend” that is going to be with the field for decades to come. My big takeaways? Non-professional caregiver roles are going to expand, using tech-enabled tools (see The Number Of Tech-Enabled Professionals & Caregivers On the Increase and In Health Care Tech Investments, Keep Consumers Part Of The Equation). “Consumerism” in terms of marketing health care solutions to consumers will continue (see Consumer Sovereignty As Success Strategy and What Do Your Consumers Want?). And, health plan executives will continue to feel high-value solutions to common consumer health care support needs.
For more on the health plan perspective, don’t miss our line up of health plan executives at upcoming OPEN MINDS institutes:
- Mario San Bartolomé, M.D., National Medical Director, Substance Use Disorders, Molina Healthcare, Inc. will deliver the keynote for The 2017 OPEN MINDS Management Best Practices Institute, “Expanding The Continuum Of Care: How Molina Is Improving Care Coordination For Complex Consumers” on August 16 in Long Beach California.
- Peggy DeCarlis, Senior VP, Chief Operating & Innovation Officer, New Directions Behavioral Health will deliver The 2017 OPEN MINDS Management Best Practices Institute session, “Redesigning Behavioral Health For The Future: The New Directions Approach To Building A Better Care Delivery System” on August 17 in Long Beach, California.
- Martha R. Temple, Senior Vice President, Behavioral Health Services, Optum, will deliver the keynote for The 2017 OPEN MINDS Executive Leadership Retreat, “Leadership Challenges In An Uncertain Landscape: Implications & Opportunities” on September 26 in Gettysburg, Pennsylvania.
- James Schuster, MD, Chief Medical Officer & Vice President, Behavioral Integration, Behavioral Health and Medicaid Services, UPMC Insurance Division, Community Care Behavioral Health Organization, will deliver the plenary address for The 2017 OPEN MINDS Technology & Informatics Institute, ‘The Future Role Of Medicare & Medicaid Health Plans: Data Sharing To Enable Population Health Management” on November 8 in Philadelphia, Pennsylvania.
And look for continued coverage of this topic next week, when we will look at the affordability of health care for the under-65 population.