By 2030, every Baby Boomer will be 65 or older, meaning that 1 out of every 5 U.S. citizens will be of retirement age. As a result, there will be far more demand than healthcare supply in the future. Healthcare costs will increase, and we’ll need to adapt. The U.S. home care market is expected to grow from $100 billion in 2016 to $225 billion by 2024, driven by an expanding senior population.
The health problems Americans start facing when they reach 50 years of age are compounded when the high cost of healthcare prevents them from seeking treatment, taking their prescriptions, or leading an otherwise healthy lifestyle. A survey of U.S. adults conducted by West Health and Gallup explored the various ways healthcare costs affect Americans aged 50 and older today.
Total national health expenditures are expected to reach $5 billion by 2025, according to the U.S. Census Bureau and the Centers for Medicare and Medicaid Services. Federal health expenditures as a percentage of GDP hit more than 15% in 2016. That figure will climb to 19.4% of GDP (approximately $6 trillion) in 2027, according to annual estimates from the Center for Medicare and Medicaid Services. And a significant factor in that growth will be the population aging into Medicare.
By 2025, U.S. providers will face a collective shortage of about 500,000 home health aides, 100,000 nursing assistants, and 29,000 nurse practitioners.
Consider these 2016 national averages from the U.S. Department of Health and Human Services:
- $225 a day or $6,844 per month for a semi-private room in a nursing home
- $253 a day or $7,698 per month for a private room in a nursing home
- $119 a day or $3,628 per month for care in an assisted living facility (for a one-bedroom unit)
According to the most recent West Health-Gallup survey, more than a third of adults 65 and older (37%) are concerned they will not be able to pay for needed healthcare services in the next year. The situation is even worse for older Americans who are not yet eligible for Medicare, with nearly half (45%) of adults aged 50 to 64 reporting the same concern level. This puts almost 50 million adults aged 50 and older at risk for more severe illness and even death due to the cost of healthcare.
U.S. Department of Health and Human Services data show that out-of-pocket healthcare expenses for adults 65 and older rose 41% from 2009 to 2019; out-of-pocket expenses take up a more significant proportion of individuals’ expenditures as they age because of an increase in demand for health services and the reality that Medicare does not cover all health expenses. People 65 and older spend nearly twice as much of their total expenditures on healthcare costs when compared with the general population, even with 94% of this age group being covered by Medicare.
As costs continue to climb over the next decade, the number of Americans 65 and older will also rise, by a rate of about 10,000 people per day, according to the U.S. Census. This rapidly growing group of older Americans — which those currently 50-64 and aging into Medicare are entering — is already saying healthcare costs are a financial burden (24% of those 50-64 call it a significant burden; 48%, a minor burden). This burden for substantial proportions of older Americans sacrifices basic needs to pay for healthcare.
The West Health-Gallup survey shows that a sizable proportion of the older adult population copes with healthcare costs by skipping treatments and cutting back on introductory and essential needs. Avoiding vital medical care could compound adverse health outcomes now and in the future.
Twelve percent of those 65 and older- approximately 6.5 million people- say they or a member of their household had a health problem in the last year that they did not seek treatment for due to cost. Eleven percent of Americans in this age group — 6 million people — report that they or a family member skipped prescribed pills to save money.
A small portion of the population accounts for a large share of health spending in a year. Although we tend to focus on averages, few people have spent around the standard since individual health needs vary over the life course. Some portion of the population (older adults and those with severe or chronic illnesses) require more and higher-cost health services than those who are younger or otherwise typically in need of fewer and less costly services.
In 2019, 5% of the population accounted for nearly half of all health spending. The 5% of people with the highest health spending had an average of $61,000 in health expenditures annually; people with health spending in the top 1% have average spending of over $130,000 per year. At the other end of the spectrum, the 50% of the population with total health spending below or equal to the 50th percentile accounted for only 3% of all health spending; the average spending for this group was $374 in 2019. Roughly 14% of the population had $0 in health expenditures in 2019.
To make matters worse, venture capital groups have been buying elder care facilities and reducing staff. Costs, to make them more profitable at patients’ expense while charging Medicare and caregivers premium prices.
According to Pew Research, approximately 40.4 million adults in the United States are caregivers to seniors aged 65 and older. Among these 40.4 million, 61% are employed, with over half working full-time jobs. Additionally, one in five caregivers claims they administer care daily.
Simply put, our healthcare system is unprepared for the economic burdens of caring for the elderly. It’s a storm that’s fast approaching.