Does Staying Healthy Reduce Your Lifetime Health Care Costs?
AbstractMedical and long-term care costs represent a substantial uninsured risk for most retired households. A recent brief from the Center for Retirement Research at Boston College reported new findings on average lifetime health care costs at selected ages and on the distribution of those costs. This second brief explores the relationship between health care costs and health status. That is, it considers whether current good health is a predictor of low health care costs over one’s remaining lifetime. If so, healthy households could set aside less for health care expenditures than the unhealthy, and households that stay healthy could release for general consumption money that they had previously set aside for health care costs.1 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 premiums2 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.
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Bibliographic InfoPaper provided by Center for Retirement Research in its series Issues in Brief with number ib2010-8.
Length: 6 pages
Date of creation: May 2009
Date of revision: May 2009
Publication status: published on the Center for Retirement Research at Boston College website
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This paper has been announced in the following NEP Reports:
- NEP-AGE-2010-05-22 (Economics of Ageing)
- NEP-ALL-2010-05-22 (All new papers)
- NEP-HEA-2010-05-22 (Health Economics)
- NEP-IAS-2010-05-22 (Insurance Economics)
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- Werding, Martin & McLennan, Stuart, 2011. "International portability of health-cost coverage : concepts and experience," Social Protection Discussion Papers 63929, The World Bank.
- Robert Holzmann & Johannes Koettl, 2012. "Portability of Pension, Health, and other Social Benefits: Facts, Concepts, and Issues," CESifo Working Paper Series 4002, CESifo Group Munich.
- Holzmann, Robert & Koettl, Johannes, 2011.
"Portability of pension, health, and other social benefits : facts, concepts, issues,"
Social Protection Discussion Papers
62725, The World Bank.
- Holzmann, Robert & Koettl, Johannes, 2011. "Portability of Pension, Health, and Other Social Benefits: Facts, Concepts, Issues," IZA Discussion Papers 5715, Institute for the Study of Labor (IZA).
- Martin Werding & Stuart McLennan, 2012. "International Portability of Health-Cost Cover: Mobility, Insurance, and Redistribution," CESifo Working Paper Series 3952, CESifo Group Munich.
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