The Health Care Costs of Being Healthy
New from the Center for Retirement Research at Boston College is an issue brief with the provocative title, "Does Staying Healthy Reduce Your Lifetime Health Care Costs?" The answer is, "not so much:"
Our main finding is that although the current health care costs of healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime. To illustrate, the expected present value of lifetime health care costs for a couple turning 65 in 2009 in which one or both spouses suffer from a chronic disease is $220,000, including insurance premiums and the cost of nursing home care, and 5 percent can expect to spend more than $465,000. The comparable numbers for couples free of chronic disease are substantially higher, at $260,000 and $570,000, respectively. This brief explains this somewhat counterintuitive finding.
It is kind of like the way being a very poor driver -- prone to accidents and the like -- may reduce your lifetime expenditures on automobiles.
Health Care Costs....
And you can thank your government for this. By putting the insurance companies in the primary care business under the false premise that covering preventative medicine reduces long term costs, we will all suffer increasing and unnecessary expenditures for premiums.
Somebody go tap Ms. Pelosi on the shoulder and ask her how she liked the windowpane acid.....
So, why not summarize the findings of the brief?
The brief states that one of the reasons the cost of being healthy is higher over a lifetime is because those lifetimes are longer. This is not as counterintuitive as is implied. In fact, before even looking at the brief, that was my first thought.
Not surprising
Of course the overall costs will be higher if you live longer - that shouldn't be surprising. What matters is the affect on public policy. If all the health care costs Medicare expects to pay out over the next 25 years, could be spread out over the next 40 - it would suddenly be a more manageable cost. The same theory as switching from a 15 year mortgage to a 30, yes you pay more interest but at least you can make the payments. This is why a healthy population helps the budget problems. If each unit of cost each year is less than projected, the budget problems are mitigated regardless of the overall payments made over 5 decades.
Health Care Costs and the Healthy
Professor Samwick,
I am curious to know if you have seen research on increased productivity and output by people who are healthier and live longer, which should at least mitigate the additional cost.