A new report has found that aging is not as overwhelming a driver of increased healthcare spending as isgenerally believed. As people age, they spend more on health care per capita, but seniors have consistently contributed an average increase of less than half a percent per year to healthcare cost growth for decades, according to the news release on Wednesday.
The study, "Health Care Costs from Birth to Death," examined the impact of age and gender on overall and retiree health costs, Medicare spending, and spending on disease from 2002 to 2010.
The research also developed separate indexes for the commercial and Medicare populations due to their different reimbursement rates. Using separate indexes instead of costs also allowed for comparison between years, said the report authors, which was sponsored by the Society of Actuaries (SOA) using data from the Health Care Cost Institute (HCCI).
Average healthcare costs per capita for seniors were estimated at about $146,400 for someone who retires at the Medicare eligible age of 65 and lives until 85, not including long-term care costs that may be incurred, the release said.
Retiring before age 65, however, results in higher out-of-pocket spending for consumers, including for non-Medicare premiums. Those who retire early at age 55 and live to age 85 will spend about $226,000 more on health care for a total of $372,400 than the person who retires at age 65, the release said.
Age is just one of many variables accelerating healthcare spending, including generational attitudes towards health, treatment pattern changes, changing technology, and the availability of new drugs according to Dale Yamamoto, the author and an independent actuarial consultant.
"The aging of America is often cited as a key driver of the nation's high healthcare bill. This study shows it's a much smaller factor than most people think," he said in the release.
The changing demographics of age and gender have contributed from 7 percent to 10 percent of the real growth in per capita healthcare costs, or less than 0.5 percent per year, depending on the period studied, the report said.
In assessing retiree healthcare costs, the report also evaluated the effect of raising the Medicare eligibility age from 65 to 70, which would change who is covered and exclude younger and possibly healthier people, the release said.
Yamamoto found that raising the eligibility age would reduce overall Medicare costs by about 19 percent but would increase the per person costs by 12.5 percent for those over age 70.
The research report examined a more complete picture of healthcare spending from birth to age 98 for people covered by commercial health insurance and for those covered by Medicare fee-for-service. "…This report should spur further research and help inform policymakers about what is driving health spending." said David Newman, HCCI executive director, in the release.
The report showed that healthcare costs generally increase by age except for the very youngest. Over a lifetime, healthcare costs on average:
- are very high in the first year or two of life, then drop significantly by age five
- rise modestly through the teen years
- accelerate for women during child-bearing ages and flatten out in the 40s, then rise again
- are relatively flat for men in their 20s, pick up after age 30 but remain lower per person than same-age women.
"The 'cross-over age' occurs in the early 60s, when per capita spending for males exceeds that for females," the report said. Medicare costs for beneficiaries age 65 and older steadily rise until around age 90 when female healthcare costs start to decline.