There’s good news and bad news when it comes to living longer: the good news is, yes, you’ve lived a healthier life and thus, you’re living a longer life. The bad news is that your lifetime health costs are greater than those for a person who’s not had good health.
While current health costs for healthy retirees are lower than those for the unhealthy, the lifetime health costs for healthy people are higher. This finding comes from a study asking the question, Does Staying Healthy Reduce Your Lifetime Health Care Costs?, from the Center for Retirement Research (CRR) at Boston College.
Here are a few specific numbers that can jolt those people who believe taking good care of themselves in life will save them money in the long run: the present value of lifetime health costs for a couple turning 65 in 2009 where one or both spouses have a chronic disease is $220,000, including insurance premiums and the cost of long term care. 5% can spend over $465,000.
For a couple with no chronic conditions, the present value of lifetime health costs is $260,000 ($40K more than for the couple with chronic illness), and over $570,000 for the expensive 5% outlier couples.
What’s driving up lifetime costs for healthier people? It’s that ‘lifetime’ that does it: at age 80, the healthy person has a remaining life expectancy 29% longer than people in unhealthy households. The longer people live in good health, the more likely they’ll need long-term care (like expensive nursing homes), as well as needing more medical treatment as they take on chronic conditions later in life.
Health Populi’s Hot Points: So the good news, bad news, then, is that the longer we live, the more savings we’ll have to accumulate for lifelong health spending. This can take the form of long-term care insurance and/or long-term savings in investment funds. The CRR points out that long-term care insurance gets more expensive the longer we wait to purchase it — particularly if/when we develop chronic conditions which make us bad risks for LTC policies. This is a prime example of where financial health directly dovetails into physical health.
This inevitable scenario also begs for innovation in long-term care using mobile and other technology platforms that keep people healthy-at-home. Today’s LTC/nursing home model isn’t financially sustainable for most people. The generation of boomers that enters their retirement phase this year, and ongoing, doesn’t have the savings to cover the costs of the average nursing home in today’s market prices. Furthermore, Medicaid won’t be able to bear these costs, given the sad fiscal state of that public plan. To make the market healthy for the adoption and use of mobile and technology-based home health solutions, payers (Medicare, can you hear me?) need to align reimbursement and re-imagine home care, long-term care, and healthy aging at home. This is exactly what a group of policy makers, technology developers, and I recommended last week in the very room where Senator Ted Kennedy used to hold his meetings with the U.S. Senate Committee on Health, Education, Labor and Pensions.