Health Care for Increased Life Expectancy Not as Costly as Believed

The cumulative remaining lifetime medical costs for people who are ill at age 70 are about the same as for those who are healthy at the same age, despite the fact that healthy 70-year-olds live about three years longer than unhealthy 70-year-olds, according to a study in the New England Journal of Medicine, the AP/Philadelphia Inquirer reports. The study, conducted by the CDC's National Center for Health Statistics, suggests that increasing life expectancy might not cost Medicare as much as some experts have predicted (Johnson, AP/Philadelphia Inquirer, 9/11). CDC researchers examined the medical records and payments from 1992 through 1998 of about 17,000 elderly people who were at least 70 years old (Pereira, Wall Street Journal, 9/11). The study found that a healthy and mobile person at age 70 could expect to live 14.3 more years and accrue about $136,000 over that time in medical costs in 1998 dollars. A person with at least one limitation in daily activities -- such as the inability to bathe unassisted -- could be expected to live 11.6 more years and accrue about $145,000 in total medical costs. Medicare beneficiaries with no limitations had an average of $4,600 per year in medical costs, while beneficiaries with moderate disabilities had average yearly medical costs of $8,500. Beneficiaries with more severe disabilities had average costs of $14,100 per year, and those in nursing homes had average costs of $45,400 per year.

Policymakers and economists have speculated that the increasing life expectancy in the United States could require greater Medicare spending, the AP/Inquirer reports (AP/Philadelphia Inquirer, 9/11). Nearly $271 billion was spent on Medicare in 2002, and HHS estimates that the cost will increase to $495 billion by 2012 and that the program will be insolvent by 2026, according to the Journal. Lead researcher Dr. James Lubitz of NCHS said, "Our study shows that current efforts to improve the health of the middle-aged and the younger elderly won't have an adverse financial effect because people will be longer on Medicare" (Wall Street Journal, 9/11). However, Lubitz added, "Improving health should be the overall goal of our health care policy, but it's not going to save the Medicare system." Sandra Decker, a researcher at the International Longevity Center-USA, said that Medicare costs will increase because of the growing number of beneficiaries who will be in the program, not because of increased longevity. According to the CDC, 71 million U.S. residents will be 65 or older by 2030 (AP/Philadelphia Inquirer, 9/11). In an accompanying editorial, David Cutler, an economics professor at Harvard University, said that "current Medicare projections, which implicitly assume that longer life costs more," are "substantially overstated"; however, he did not say by how much (Wall Street Journal, 9/11). An abstract of the study is available online.