The Cost of Aging in America

 

Income levels for aging Americans are increasing,
but not as quickly as “The Cost of Aging in America.”

The infographic below was produced by the Milken Institute School of Public Health at George Washington University. It explores the serious financial burdens faced by aging Americans, their loved ones, and industry — as well as steps our health care system might take to counteract this trend. I gladly feature it today to complement other articles here about health reform, public policy, and the future of healthcare.

Some highlights:

  • The number of seniors 85 and older will triple by 2050, an important statistic because these are people who need the most expensive care.
  • The cost of healthcare in America is already over $3 trillion/year, and that doesn’t even include the roughly $450 billion provided by unpaid family members.
  • Paid caregivers earn just $18-20K per year, and while demand for their services will likely double by 2022, their wages likely won’t increase much.

This image has powerful statistics, but how do blind people see them? To accommodate that need, a transcript is provided below.

The Cost of Aging

THE COST OF AGING IN AMERICA (TRANSCRIPT)

As baby boomers age, the sheer number of older adults will be unprecedented in U.S. history. The portion of the population living on fixed incomes with high medical expenses will increase as the proportion of seniors — especially those older than 85 — grows. As a result, the health care system and federal programs such as Medicare and Social Security will come under increasing financial strain.

In 2010, there were already 40.3 million people aged 65 and older — 12 times the number in 1900.

The percentage of the population age 65 and over is projected to reach more than 20% — or 89 million — by 2050.

  • 1900: 4.1%
  • 2010: 13.0%
  • 2050: 20.9%

AARP reports that the 85 and older population — those most likely to need expensive long-term care, suffer disability or require help with daily activities — will increase by 69% between 2012 and 2032. Between 2012 and 2050, the number will triple, increasing by 224%.

Increasing Expenditure Rates

Health spending in the U.S. as a share of the GDP has tripled in the last 50 years and is expected to continue an upward trend.

  • 1960: 5.1%
  • 1985: 10%
  • 2012: 18%
  • 2020: 20%
  • 2050: 28%
  • In 2012, 49.5 million people (16% of the entire U.S. population) were covered by Medicare — roughly 10 million more than in 1999.
  • In 2013, Social Security and Medicare together accounted for 41% of federal expenditures.
  • According to the 2014 Annual Report, neither “can sustain projected long-run programs in full under currently scheduled financing.”

Distribution of Health Care Spending for Aging Americans by Payer

  • Medicare: 60.6%
  • Private insurance: 14.8%
  • Medicaid/CHIP: 4.2%
  • Out-of-pocket: 12.5%
  • Other: 7.8%

Average health care expenses for those 65 and older: $10,082

Average expenses for those under age 65: $3,931

Distribution of Health Care Spending for Aging Americans by Type of Service

  • Hospital inpatient: 34.9%
  • Office-based/outpatient: 28.5%
  • Pharmacy: 22.2%
  • Home health/other medical: 9%
  • Dental: 3.4%
  • Emergency room: 2.1%

Rising Out-of-Pocket Costs

Income levels for aging Americans are increasing, but not as quickly as their medical bills. By 2040:

  • Median annual out-of-pocket costs for Americans age 65 will nearly double:
    • 2010: $2,600
    • 2040: $6,200
  • Nearly 1 in 10 older people will spend more than $14,000 on health care each year.
  • The median share of household income spent on health care by senior citizens will rise from 10 to 19 percent.
  • Almost half of all adults age 65 and older will spend more than 1/5 of their household income on health care:
    • 2010: 18%
    • 2030: 35%
    • 2040: 45%
  • The median share of income spent on health care by older adults in the bottom fifth of the income distribution will nearly double:
    • 2010: 21%
    • 2040: 39%

The Burden of Disease

In the U.S. and other parts of the world, the main causes of death have shifted from infectious diseases — such as pneumonia, smallpox and tuberculosis — to chronic diseases such as cancer and heart disease.

Top 5 Causes of Death Among 65 and Over

  1. Heart disease: 476,519
  2. Cancer: 396,173
  3. Chronic lower respiratory diseases: 118,000
  4. Cerebrovascular disease: 109,764
  5. Alzheimer’s: 82,438

In 2012, 1.6 million patients were diagnosed with cancer. Approximately 868,000 (more than 55%) were age 65 or older. Costs for cancer care burden the Medicare program, accounting for 10% of its total expenditures.

The Impact of Chronic Conditions

Chronic conditions like diabetes are expected to become as or more prevalent than acute health care problems — and many chronic conditions are preventable.

The U.S. health care system is designed to treat one condition or disease at a time, but many patients have more than one chronic condition. Multiple chronic conditions can lead to:

  • An increased risk of adverse drug reactions
  • Conflicting health advice
  • Unnecessary and duplicative tests
  • Preventable hospitalizations

Treatment for people with multiple chronic conditions accounts for 66% of health care spending in the United States.

Just 9.3% of adults with diabetes have only diabetes.

The Role of Prescription Drug Costs

Though out-of-pocket prescription drug costs for older Americans have decreased since the Medicare Prescription Drug Plan (Part D) was introduced in 2006, these costs still vary widely from person to person.

  • Average prescription costs per person: $2,834
  • Percent paid out-of-pocket by older Americans:
    • 1992: 60%
    • 2008: 23%
  • Percent covered by:
    • Private insurance: 24%
    • Public programs: 53%
  • In 2008, about 6% of older Americans incurred no prescription drug costs; 15%, however, incurred $5,000 or more in prescription drug costs that year.
  • Average prescription drug costs for older Americans:
    • No chronic conditions: $1,230
    • 5+ chronic conditions: $5,300

The Growing Demand for Long-Term Care

In fiscal year 2011, the U.S. spent $357 billion on long-term care.

70% of those over 65 will need long-term care at some point in their lives.

According to the Department of Health and Human services, the number of Americans needing long-term care will increase from 12 million in 2010 to 27 million in 2050.

More than 90% of aging Americans want to stay in their homes as long as possible. As a result, the number of those entering skilled nursing facilities has decreased. However, even the costs associated with in-home care can be prohibitive for many patients and their families.

From 2013 to 2014, the median annual national cost of…

  • An assisted living facility room increased 1.45% to $42,000
  • A home health aide for long-term care increased 1.59% to $45,188
  • A homemaker (employed to handle basic tasks like shopping, cooking, cleaning and doctor appointment transport) increased by 4.11% to $43,472

In 2009, family caregivers provided $450 billion worth of unpaid care, almost 4 times Medicaid long-term services and supports spending ($119 billion) and nearly seven times what people paid privately ($67 billion).

Percent of aging population residing in skilled nursing facilities:

  • 2000: 4.5%
  • 2010: 3.1%

Long-Term Care Funding Sources

  • Medicaid: 40%
  • Medicare Post-Acute Care: 21%
  • Other Public and Private: 18%
  • Out-of-pocket: 15%
  • Private Insurance: 7%

Average Annual Care Costs by Type of Service

  • Nursing home: $90,520
  • Assisted living facilities: $42,600
  • Home Health Aide: $20,800
  • Adult Day Care: $18,200

More than 34% of seniors live below 200% of poverty ($22,002 for people who are 65 or older), meaning that many families quickly exhaust their assets and must rely on Medicaid to support their long-term care needs.

Residential care facilities tend to give care for affluent populations. Residents in assisted living facilities usually self-pay.

Medicaid funds for long-term care have shifted away from nursing homes. However, funding for home- and community-based services has increased from 13% of total funding in 1990 to 43% in 2007.

Caregivers Under Pressure

Most long-term care is provided in-home by family members, friends and others who are unpaid. Professional caregivers, alternatively, are in-demand but often underpaid and under-trained.

Personal

  • In 2013, 47% of middle-aged adults had a parent age 65 or older and were either raising a young child or financially supporting a grown child; 15% were supporting both an elderly parent and a child.
  • In 2013, 21% of middle-aged adults had provided financial help to a parent age 65 or older in the past year.
  • In 2010, there were 4.5 working-age people to support each older person; if you account for those who were also supporting young people, then there were only 1.5 working-age people to support each dependent.

Professional

  • Though careers as personal care aides and home health aides are projected to nearly double— 49% and 48%, respectively – between 2012 and 2022, they also have one of the fastest turnover rates.
  • Federal mandate only requires 80 hours of training to be certified as a personal care aide.
  • Additionally, of the fastest growingcareers, these professionals also average the lowest salaries:
    • Personal care aide: $19,910
    • Home health aide: $20,820.

Counteracting Rising Health Care Costs

  • Investing in Direct-Care Providers to Improve Chronic Disease Management: The Brookings Institute suggests that “training models that better prepare this workforce are critical — particularly those that promote integrated care and improve chronic care and general geriatric capacity.”
  • Integrated Life and Care Models: Resources and organizations that help continue care and provide resources outside the walls of a doctor’s office or hospital are crucial to ensuring that patients are able to adhere to treatment regimens and benefit from the support of a community.
  • Improved Health IT integration and communication: Interoperable ability for providers to access aging patients’ medical records.
  • Increased End-of-Life Education: Encouraging patients, friends and loved ones to have a frank discussion about end-of-life care can help families better understand how to prepare, both emotionally and financially, for the death of a loved one.

Sources:

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