The Retirement of the Baby Boomers
There are currently 10,000 baby boomers retiring every day. By the year 2020, the costs for Medicaid and Medicare will have more than doubled. When a 65-year-old couple retires, their out-of-pocket health care costs excluding rehabilitation and long-term nursing care will be $275,000. The odds of paying for these costs is only fifty percent. The exorbitant costs of health care for the baby boomers has led to new innovations. The cost of healthcare has mandated changes for more emphasis on care management, better value and sharing the costs with the consumers. The cost of healthcare is increasing faster than the growth of the economy. This means the Trust Fund established for Medicare will be paying for less and less. Some of the experts believe the fund will be bankrupt by 2033.
The majority of Americans feel responsible for planning their retirement. According to a survey, 91 percent of Americans felt somewhat responsible for the sufficiency of their retirement income as opposed to 73 percent of the global workers. Being prepared for retirement in the United States is difficult due to the high costs of healthcare. According to certain calculations, an individual with a yearly income of $40,000 requires $1.5 million for a comfortable retirement. This does not include the costs of health care. Despite the efforts of the providers to decrease costs through remote-tracking technology and in-home care, the cost of healthcare continues to rise. Procuring long-term insurance may be less expensive than the other types of coverage, insurance sponsored by employers is expensive and Medicare does not cover all care.
The Rising Costs of Healthcare
Numerous individuals have no choice but to rely on assistance from the government or go broke. As the baby boomers continue to age, the problem is becoming worse. New strain is being placed on the safety net for Social Security. According to AARP, the United States’ cost for health care and its failure in the generation of better outcomes stands out. Despite their best efforts, fifty percent of all seniors will not have enough money to cover their costs for health care. The limits of Social Security, Medicaid and Medicare are all being tested. The Congressional Budget Office stated the cost for Medicare will rise eight percent by 2035 and as much as fifteen percent by 2080.
Retirees are living longer lives with higher rates of diabetes, obesity, high cholesterol and hypertension. This means their finances must cover their medical expenses for a longer period of time. No solution has been found to decrease the cost of health care behind the scenes. The only good news is that innovations in the healthcare industry have been triggered by the baby boomers. The issue is innovations do not necessarily mean lower costs. The creation of new processes and drugs leads to an increase in demand. This can increase costs even further. When collaboration and coordination among health care providers and medical administrations are improved, costs should decrease.
The Shortage of Professionals in the Workforce
Services must be streamlined and take long-term health care into consideration to help prevent emergencies and deteriorating health. Software and services can be developed by the private sector to decrease waste and cut costs. Both innovation and preemptive care are required to decrease the need for expensive treatments. Another important aspect are the gaps left in the workforce due to the retirement of the baby boomers. Businesses are not prepared for this. Approximately two-thirds of the baby boomer generation is considering retirement. The question is if there are enough Gen Xers and millennials to fill the gap. There is no doubt the healthcare industry is not prepared.
According to the New York Times, there is already a shortage of nurses, aides, pharmacists and social workers with the training necessary for elderly care. This shortage is expected to increase. Young people need to be provided with incentives to enter the nursing and eldercare sectors. Issues for seniors are already being alleviated in the private sector by nursing homes using innovation. Nursing homes in countries such as Japan are already taking up the slack left by the government by making an investment in the elderly instead of leaving them at the mercy of federal funding. Private solutions can also benefit seniors living in the United States. These solutions may eventually become the only reliable way for health care to function once the rest of the baby boomers have retired.
Long-Term Care for the Elderly
The chances of requiring long-term care increase for every individual living a longer life. A good example is a retired public school teacher living in Altoona, Iowa. Her lung cancer medication is costing $2,600 for the first month of the new year and $750 per month for all of the additional months. The cost of prescription drugs may finally be addressed by Congress because the cost of healthcare is now a major issue for American voters. Americans are living longer with chronic conditions like dementia and having less children. Less children mean there are not going to be enough caregivers for the family. As the number of available caregivers is diminishing, people are not also not saving enough money to finance their long-term care.
The commercial market is struggling while some of the biggest providers have literally gone broke. In 2017, a Pennsylvania Court ordered Penn Treaty into insolvency. The experts in the industry do not believe this is due to any underpricing on the market. The belief is the providers have underestimated the true costs. Seniors are facing recurring issues in facilities and at home that are placing even more pressure on the system. Employers and states are attempting to fund individuals acting as a caregiver to their elderly or extremely sick family members. At-home care has received support for many years as a less expensive option. The issue is the patient must cover the cost of the equipment as opposed to the facility. As the costs increase, family members have no choice other than caring for their loved ones.