Are Baby Boomers Creating the Next Financial Healthcare Crisis?

Are baby boomers creating the next financial crisis for the healthcare system? Will they live too long and demand too much care?

The news during the past decade has illustrated challenges not experienced in years: unemployment, the loss of health care benefits, bank failures, the mortgage crises resulting in families losing their homes, and companies going out of business. 

Rising inflation and recession worries in 2002 continue the cycle of doom and gloom presented by the news. But what’s the real truth specific to healthcare costs for aging baby boomers?

Long-Term Care Costs Continue to Rise

Whether or not you agree with the political side of these events, the projections regarding the need for long-term care are real and will support the next financial crisis.

According to research performed by the Urban Institute (www.urban.org), the number of older adults accessing paid home care will more than double between 2000 and 2040 increasing from 2.2 million to 5.3 million while the number of older nursing home residents will also more than double over the period, increasing from 1.2 million to 2.7 million.¹ 

Medicare, Past Present and Future, indicates that health care spending is growing at 2-3 times the national debt.  Medicare spends more money than it receives in dedicated taxes and premium payments allocated each year.

By 2020 Medicare will claim 1 in every 5 tax dollars and by 2050 Medicare will claim 1 of every 2 tax dollars.²  It doesn’t take a scholar to see that sustaining Medicare in its current form will be near impossible.

Choosing Between Healthcare and Something Else

The literature mentions that eventually, choices will have to be made between spending funds on health care or other government programs. It will be the choice being a good candidate for knee replacement surgery versus a candidate who could have the surgery but will not recover well because of past lifestyle choices.

The health care system will have to ask, “Is it wise to spend health care dollars on a poor surgery candidate?”

Here are a few ideas about ways to educate yourself about healthcare issues:

• Become educated about maintaining your own health to reduce unnecessary health care expenditures.  Take actions to improve your overall health.
• Translate what you know into action:  stop smoking, exercise, eat healthily and maintain a recommended weight.
• Write to your legislators about realistic solutions for healthcare and entitlement programs
• Become an active participant in organizations educating and supporting health care to raise overall awareness of the issues
• Purchase long-term care insurance today while healthy.  Premiums increase substantially after the diagnosis of the disease.  Some diagnoses, like the diagnosis of Alzheimer’s disease, eliminate the opportunity to purchase long-term care insurance. Some states are now requiring residents to purchase long-term care plans or face paycheck deductions for future long-term healthcare costs. 
• Plan for long-term care needs to avoid becoming reliant on the government plan Medicaid
• Talk to your parents about planning for long-term care today so they won’t end up impoverished or need your retirement savings to pay for their care

Unless action is taken today through planning, education, and advocacy, the aging of the Baby Boomer Generation might result in the next financial crisis for the United States related to the entitlement programs of social security, Medicare, and Medicaid.

References:

(1) Johnson, Richard et al., Meeting the Long Term Care Needs of Baby Boomers.  Discussion paper 07-04 in The Retirement Project series. www.urban.org

(2) Livingston, Kari. Study Claims Medicare Debt Will Rise $32.4 Trillion. National Center for Policy Analysis. www.ncpa.org/pub/st/st299

© 2012, 2013, 2022 Pamela D. Wilson.  All Rights Reserved.

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