Monday, May 17, 2010

Healthy people may accumulate higher long term care and health care costs due to longer life expectancy (Boston College Study)

Boston College’s Center for Retirement Research has published a study indicating that the healthy may pay over $105000 more in health care costs than those in poor health, even though their health related expenses are lower when they are around age 70-80 ($6500 a year vs. $8000 for the less healthy).

That’s because the healthy early seniors have longer life expectancies, and eventually many people would get chronic disease (especially Alzheimer’s) if they live long enough, well past “natural senescence.”

At age 80, a healthy person has a 29% longer life expectancy. Yet, the statistical expectation is that a person of 80 can expect to spend one-third of his or her remaining years with a chronic disease.

All this appeared on Yahoo! and Market Watch in an article by John Powell ("Staying healthy may cost you in retirement") on Friday May 14, link here.  The URL for the Boston College study is here.  The title is "Does Staying Healthy Reduce Your Lifetime Health Care Costs?" and the authors are Wei Sun, Anthony Webb, and Natalia Zhivan. (Just an aside: I remember that Boston College students appeared on student television quiz shows back in the 60s.)  It appears that the numbers focus on out-of-pocket costs, including both conventional medical and dental care and especially custodial long term care (the latter of which is not normally reimbursed by Medicare, except for some limited benefits in Hospice).

Does this provide a rationalization to going back to smoking and eating hamburgers?

That’s hard to say, because many people with “Blue Zone” lifestyles reach extreme old age with no disability at all. But longer life spans while having disability can challenge others in the family, especially adult children, who then might have more difficulty remaining healthy themselves.

All of this invites robust policy debate that hasn’t happened yet. But the article suggests that people ought to be expected (maybe even legally mandated) to buy long term care insurance when relatively young, to avoid passing on costs to their children or to society as a whole. Premiums while people are young will vary a lot. Imagine the public policy debate that we could have over pre-existing conditions and long term care insurance down the road.

Genworth has a new website for helping people to estimate long term care costs, here. Genworth says that the cost of in-home care is not rising now as rapidly as the cost of assisted living or in-home care, and that may in part be related to measures like the Class Act. However, that could change if home health agencies have to provide their employees more health insurance or other benefits in the future (particularly 2014 and beyond), as with the recent Health Care Reform Act. In-home care costs also depend on the availability of willingness of family members to provide uncompensated care “off the books”.

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