Senior Health Care Financing Crisis
There is a crisis facing the growing population of American seniors who cannot adequately finance their health care needs.
For a couple retiring today, out-of-pocket health care expenses, including long-term care costs not covered by Medicare, can often exceed $500,000 over the rest of their lives. It’s no wonder the Congressional Budget Office acknowledged that the potential cost of long-term care can have “a catastrophic impact on an elderly person’s finances.”
Rising health care costs often overwhelm middle-class Americans’ savings, forcing more seniors onto Medicaid earlier.
An increasing number of Americans, even those who had previously been viewed as financially secure, now require government assistance to pay for health care costs in their later years, particularly long-term care. A Department of Health and Human Services study found that nearly 40 percent of seniors with Medicaid-financed nursing home stays were middle-class or above, based on their lifetime earnings.
The growing reliance on Medicaid adversely affects both seniors and taxpayers. Seniors who do not have adequate private resources often have fewer options and less control over their health care decisions. Taxpayers bear the financial burden when seniors must turn to Medicaid. In 2017, federal and state Medicaid distributions totaled $577 billion; $119 billion of those distributions paid for long-term care.
It is imperative that we identify new solutions to help seniors make the most effective possible use of their existing resources to pay for their health care costs. That is why ASHCF has been the leading advocate for Senior Health Planning Accounts. Learn more here.