As guaranteed pension plans continue to disappear in the lives of most workers, many retirees will rely heavily on Social Security monthly payments. Numerically, the ranks of the so-called “Baby Boomer” generation reaching the age of 65 increase by an average 10,000 individuals every day, a growth spurt that will continue over a 19-year period that began on January 1, 2011. The Social Security program assumes great importance in the lives of patients who rely on Medicare to address their health care wants and needs.
Participation in Medicare can entail high out-of-pocket costs for some beneficiaries that relate to the nature of their health problems. Approximately one in five Medicare beneficiaries has serious physical or cognitive limitations that require personal care services and supports. A March 2017 report from the National Center for Health Statistics (NCHS) examines health care access and utilization among adults with multiple chronic conditions (MCC). As the number of these conditions increases, the health care costs for those so diagnosed also will grow. The program is expensive and money is spent unevenly: 10% of enrollees represent 63% of expenditures. The 5% who die each year account for 30% of costs, often involving intensive care that prolongs life with no hope of recovery.
The adequacy of retirement income – from Social Security benefits and other sources – can be reduced quite substantially by personal health care expenditures. As reported in a study published in October 2017 by the Center for Retirement Research at Boston College, data for the period 2002-2014 were used to calculate post-out-of-pocket benefit ratios, defined as the share of either Social Security benefits or total income available for non-medical spending. The results show that average out-of-pocket spending (excluding long-term care) was $4,274 per year in 2014, with approximately two-thirds ($2,965) spent on premiums.
In 2014, the average retiree had only 65.7 percent of Social Security benefits remaining after this spending and only 82.2 percent of total income. Nearly one-fifth (18 percent) of retirees had less than 50 percent of their 2014 Social Security income remaining after out-of-pocket spending, with six percent of retirees falling below 50 percent of total income. A conclusion drawn from this analysis is that with less than two -thirds of Social Security benefits available for non-medical consumption, and limited income outside of Social Security for much of the aged population, many retirees likely feel that making ends meet is difficult. Meanwhile, Medicare spending per beneficiary is expected to resume its decades-long rise by the end of the present decade, which will exert even more pressure on retirees’ budgets.
A shortfall in Social Security financing poses a significant challenge for policymakers. The Medicare program also is on a short financial leash since its trust fund rapidly is running dry. Alternatives for shoring up these two sets of accounts are not pleasant to contemplate because they entail some mixture of either lowering annual benefit levels or imposing higher tax rates. Finding remedies for certain problems can be deferred for only so long. Eventually, Congress will be compelled to tackle them. No option exists in shifting a portion of the burden to the states. Many of them have crises in the form of significantly underfunded pension and health benefit systems for current and future retired public service employees.
More Articles from TRENDS July - August 2018
TECHNOLOGY’S IMPACT ON THE HEALTH WORKFORCE
Direct-to-consumer genotyping commercial services and CRISPR increase the necessity of having an adequate supply of competent health care practitioners. Read More
PRESIDENT’S CORNER—ASAHP MEMBER FOCUS
Barbara Jacobsmeyer, President of Inpatient Hospitals at Encompass Health, is featured in this issue of TRENDS. Read More
AFFORDABLE CARE ACT DEVELOPMENTS
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- Final Rule Issued On Short-Term, Limited-Duration Insurance Coverage Read More
DEVELOPMENTS IN HIGHER EDUCATION
- Democrats Introduce Plan In Congress To Reauthorize The Higher Education Act (HEA)
- U.S. Department Of Education Proposes New Set Of Higher Education Regulations
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QUICK STAT (SHORT, TIMELY, AND TOPICAL)
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- Tumbling Microbots For Future Health Treatments
- Using Shark Skin Patterns To Halt The Spread Of Infections Read More
AVAILABLE RESOURCES ACCESSIBLE ELECTRONICALLY
- Matching Patients And Their Records
- Reasonable Patient Care Under Uncertainty
- Patient-Centered Medical Homes And Accountable Care Organizations Read More
21ST CENTURY CURES ACT, CANCER MOONSHOT, AND PRECISION MEDICINE
Congressional testimony by NIH Director Francis S. Collins highlights advances that have been made in the implementation of this key piece of legislation. Read More
GENDER BIAS IN HOW PROFESSIONALS ARE SPOKEN ABOUT
A study reports evidence of gender bias and how it affects women in high-status fields, such as science, technology, engineering, and mathematics (STEM). Read More