Thursday, May 20, 2010

Counter-intuitive health tidbit:
Healthy aging costs more!



Huh? Not staying healthy, but simply being healthy at 65 implies higher remaining lifetime health costs than being sickly at 65, according to a study from the Center for Retirement Research at Boston College. They encapsulate the idea this way:

... 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.

These figures include Medicare copays, Medigap insurance, and an expectation that a quarter of us will require one year of nursing home care.

Yikes!

So why will those who start out healthy end up paying out more? For one thing, those awful dribs and drabs of copays, insurance, and drug charges will go on longer as the healthy live longer. This stuff adds up. And because those who start out healthy at 65 will mostly live longer, eventually more of them will succumb to the really expensive parts of the health bill: chronic disease treatments and the need for around-the-clock care.

I guess if you think about this, it makes some sense. But the difficulty of getting one's mind around it points up how counter-intuitive much about health care economics remains. No wonder much of the reaction to the Democrats' health insurance reform is pained confusion. The "system" is no system and understanding its implications is hard.

For myself, I am simply stunned by the sheer size of the costs projected for most of us. Even the lowest figure projected for a couple arriving at 65 pretty healthy is $260,000. (I hope I'll get there in that condition not long from now.) I realize the idea is that this expenditure will be spread over a lot of years (25?), but the sheer magnitude remains stunning. That's what we paid for a two unit house 20 years ago ...

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