You Can’t Outrun Health Care Bills

Insurance News Net reports:
“Medical costs are rising and the future of health care faces hot debate in Congress.

What does that mean for baby boomers, like me? How do we avoid sliding into the poorhouse during retirement due to sky-high health expenses?

Whatcom County routinely wins praise one of the country’s great places for recreation, so doesn’t it make sense for graying Bellinghamsters, Ferndalians and Lyndenites to lace up their sneakers and jog?

It seems logical that retirees who are healthy today would spend less money over the course of their lifetime on health insurance, co-payments, out-of-pocket expenses, home health care and nursing home care, the whole shebang.

It seems logical, but it’s wrong, according to a fascinating study I came across from the Center for Retirement Research, at Boston College.

Three researchers, Wei Sun , Anthony Webb and Natalia Zhivan, used data from a long-running survey of older Americans to simulate health and health-care histories for a large number of households. The study ran projections for people at age 65 and at five-year increments up to age 85.

At each stage, retirees in good health typically look forward to paying more for health care the remainder of their lives than do retirees in poor health. That seemingly twisted outcome makes sense when you consider three things:

–Healthy retirees live longer, so they run the risk of running up health care bills over more years.

–Many retirees currently free of chronic diseases — we’re talking diabetes, cancer, lung disease, heart disease or stroke — will eventually suffer one or more of those ailments.

–Because healthy retirees are more likely to live to a riper old age, they will need nursing home care due to their frailty or chronic disease.

In other words, you can exercise, but you can’t outrun disease or old age, no matter how hard you try.

That doesn’t mean people should give up the effort to stay fit, eat right and avoid stress. It does mean, the study says, that people shouldn’t delay buying health or long-term-care insurance.

Which brings us to another 2010 report from the Center for Retirement Research. Two of the same researchers, Webb and Zhivan, studied the range of health-care costs Americans might face as they age.

While a typical couple age 65 could expect to pay $260,000 (in current dollars) for health care over their lifetimes, there’s a 1-in-20 chance their tab could top $570,000, more than double.

And even as the number of years they can expect to live shrinks as they grow older, the amount of money they may have to spend on health care remains robust, because a big chunk of health care expenses occurs as death comes near.

In a nutshell, many older people face the prospect of not having enough money and insurance for all of their health care costs.

“In that case, the household will have to either forego needed health care or rely on Medicaid,” the study concludes. “The risk is not of destitution, but of health care costs impoverishing a couple or a surviving spouse, or of the household not having the retirement it planned for.”

That’s why the fight in Congress over health care is so momentous.”