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Medicare Opportunity: Looming Changes in Health and the Cost of the Boomer Generation

The population of older Americans is growing, and they are living longer than ever before. This combined with a high prevalence of chronic disease and swiftly soaring medical costs will have a significant impact on the Medicare program. Now more than ever, policymakers must consider these risks and the need to develop innovative solutions to supplement traditional healthcare, including investments in health promotion and disease prevention schemes.

Demographic Shift in the Medicare Population

The Centers for Disease Control and Prevention (CDC) estimates that 10,000 Americans turn 65 each day. In their most recent The State of Aging & Health in America report, the CDC projects that the percentage of Americans aged 65 and older will double to 20% of the total population by 2030. Longer life spans and aging baby boomers (i.e. those born between 1946 and 1964) will markedly increase the size of the Medicare population.

Acceleration in Medicare Spending

Medicare is a federal health insurance program that provides financial assistance to Americans over the age of 65 and younger people with disabilities. According to a Kaiser Family Foundation report, Medicare benefit payments increased from $462 billion in 2008 to $731 billion in 2018 – that’s a 58% increase in just 10 years.

As the population continues to age and the number of Americans over 65 continues to grow, Medicare spending is expected to double by the year 2030. The report projects that healthcare costs on a per beneficiary basis will continue to rise at an accelerated rate through the year 2049 due to a combination of increasing medical costs, longer life expectancy, and higher prevalence of chronic diseases.

What Americans Can Do: Potential Economic Benefits of Improving Cardiovascular Health in Older Adults

A recent study by Aaron et al. published in the Journal of the American Heart Association examined the link between cardiovascular health and Medicare fee-for-service coverage use and spending in 6,262 participants from across the US aged 65 or older. Cardiovascular health was assessed using the American Heart Association’s Life’s Simple 7 (LS7), a set of 7 lifestyle behaviors that can contribute to ideal cardiovascular health:

  • Not smoking
  • Increasing physical activity
  • Improving diet
  • Reducing body mass index (BMI)
  • Managing blood pressure
  • Reducing cholesterol
  • Reducing blood glucose

The authors found that better cardiovascular health (i.e. having 5-7 ideal LS7 factors vs. 0-1 factors) was associated with lower risk for inpatient encounters and lower total inpatient and outpatient healthcare spending – or $5,016 in savings per participant. The study highlights that even with similar insurance and access to health services among participants, there are still considerable differences in healthcare expenditures that seem to be related to behavioral and lifestyle factors, such as those that make up the LS7. They estimate that achieving ideal levels in 5 to 7 of the LS7 factors for the entire Medicare population could result in at least $41.2 billion in total potential annualized cost reduction.

Take Home Message

The imminent drastic rise in the aging population emphasizes the need for solutions that contribute to the health goals of Americans and mitigate the steep rise in healthcare expenditures, particularly Medicare. As discussed above, lifestyle interventions have been shown to be effective in reducing chronic disease risk factors and its associated healthcare costs. Thus, sustainable habit change programs are an important part of the solution, and one which payers, employers, and Medicare Advantage members should seriously consider, to help manage member risk and cost.

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