Medicare spending is projected to more than double between 2010 and 2030 to about $1.2 trillion.
EDITOR’S NOTE: Kaiser Health News reports on the University for Southern California’s Schaeffer Center of Health Policy and Economics use of the Future Elderly Model (FEM), a microsimulation model of health and economic outcomes for older Americans, to generate a snapshot of changing Medicare demographics and spending between 2010 and 2030.
With more Medicare beneficiaries flowing into the system in the coming years, they will be living longer and using more acute and non-acute Medicare services for longer periods.
Unfortunately, the United States has yet to confront this impending reality from a policy or financing perspective. Though tools such as the FEM can provide reasonable forecasts to guide policymakers, until the healthcare community and legislators confront these critical issues that have such an impact on the sustainability of Medicare, high-quality health care for baby boomers may not be there when they need it. Nor will it be assured that the generation paying for this care won’t be bankrupt in the process.
–Dr. Jim Palermo, Editor-in-Chief
KAISER HEALTH NEWS–After the last of the baby boomers become fully eligible for Medicare, the federal health program can expect significantly higher costs in 2030 both because of the high number of beneficiaries and because many are expected to be significantly less healthy than previous generations.
The typical Medicare beneficiary who is 65 or older then will more likely be obese, disabled and suffering from chronic conditions such as heart disease and high blood pressure than those in 2010, according to a report by the University for Southern California’s Schaeffer Center of Health Policy and Economics.
Adjusted for inflation, overall Medicare spending is projected to more than double between 2010 and 2030 to about $1.2 trillion. A massive influx of baby boomers into Medicare will be the main driver.
With the last baby boomers turning 65 in 2029, Medicare rolls are expected to number 67 million Americans in 2030, the Schaeffer Center said.
But costs per beneficiary could grow by 50 percent over the same time due to longer life expectancies, shifting health trends and medical cost inflation, the report said. In inflation-adjusted dollars, Medicare is projected to spend 72 percent more for the remaining lifetime of a typical 65-year-old beneficiary in 2030 than a 65-year-old in 2010.
“It’d be one thing if there was an increase in life expectancy while maintaining health, but this is different. If you have more people that are disabled, it’s more costly, and we’re paying more because they’re living longer,” said lead researcher Dana Goldman at the University of Southern California.
“In some ways, we are victims of our success” in extending lives and preventing mortality, he said.
“We’ve done such a good job of preventing cardiovascular disease that now we have more cancer and Alzheimer’s.”
The average life expectancy at age 65 is projected to rise by almost a year from the 2010 norm, to 20.1 years in 2030. People with disabilities at 65 will extend their old ages, too – by more than a full year, to 8.6 years in 2030, the Schaeffer Center said.
Obesity is likely to surge, affecting 47 percent of Medicare elderly beneficiaries by 2030, up from 28 percent in 2010, according to the report.
“The people about to become eligible are more sick and obese [than past beneficiaries], even though there are treatments that will keep them living longer,” said Etienne Gaudette, a lead economist from the Schaeffer Center.
Significant increases in beneficiaries with these chronic conditions are also forecast by 2030:
- – Hypertension – 79 percent vs. 67 percent in 2010.
- – Heart disease – 43 percent vs. 36 percent.
- – Diabetes – 39 percent vs. 24 percent.
- – Three or more chronic conditions – 40 percent vs. 26 percent.
Smaller increases are forecast for elderly beneficiaries with cancer – 26 percent vs. 21 percent – and stroke – 19 percent vs. 14 percent in 2010. Lung disease is expected to see the slowest growth of all, about one percentage point to 16 percent.
That change is mostly due to Americans’ declining smoking habits. By 2030, 52 percent of Medicare’s beneficiaries will be lifelong non-smokers; only 43 percent were in 2010, the report said.
The Schaeffer Center’s report was published Nov. 28 in the Forum for Health Economics and Policy.
KHN’s coverage of aging and long term care issues is supported in part by a grant from The SCAN Foundation.