Problems In Financing American Healthcare
The financing of health care is expected to be the major problem facing elderly Americans in the future.
Medicare, Medicaid, managed care and traditional private insurance programs must be included in the planning for the future. Americans with chronic acute health problems that require hospital care and doctor care are covered by the Medicare program.
However, as our population ages, there will be health issues that require long term care, beyond the one hundred days provided for by the Medicare program. These issues will require long term care whether at home, in assisted living facilities or in nursing homes. Nursing homes are also known as “skilled nursing facilities.” Some of the long term care issues would include Alzheimer’s disease, Parkinson’s , heart diseases, multiple sclerosis, osteoporosis, muscular dystrophy and stroke.
The Centers for Medicare and Medicaid Services show that the growth in health spending was at a new low for the past three years. Over the past three years since 2010, the real annual growth rate, per capita, has been just 1.3 percent, less than one-third of the long term average growth rate of 4.5% percent. This is substantially below the average growth rates between 2000 and 2007.
That is the same rate of growth as in 2009 and 2010, and in all three years spending grew more slowly than in any other year in the 51-year history of the report. As a share of Gross Domestic Product, overall health care spending also stayed the same as in the previous two years. This percentage of the GDP for the past two years was at 17.9%. Over the past thirty years, the rate of growth was .03% as a share of GDP. However, the Affordable Care Act is making a difference.
The Brookings Institute has released statements expressing that health care costs will continue to grow 1.2% faster than the GDP for the next twenty years. By the year 2025, health care would be almost 25 percent of the Gross Domestic Product.
For example, a couple, both of retirement age in 2012 who are projected to live a normal life span, could need as much as $240,000 to cover premiums for health insurance coverage and out of pocket expenses during the span of their retirement. These costs are mostly for unanticipated medical bills which are the single largest expenses for seniors lacking health insurance that would be provided by an employer. These expenses will devastate the retirement savings that most Americans have in their 401k plans which is about $107,000, on average. It is estimated that households in this situation should expect medical bills to consume more than half of their Social Security checks by the year 2027.
At the same time, nursing home stays by older Americans increased at a steady rate during the past ten years. Nursing home stays increased from 6% of people, 65 and over in 2000 to 8.5% over 65, in 2010. Consequently, total household wealth fell steadily over a six-year period. In contrast, household wealth increased steadily over the surveyed periods for those who never entered a nursing home.
