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Worried About Health Care Cost Inflation? It Has Only Just Begun

The health care cost inflation projections contained in HealthView Services’ latest reporting are simply astounding; accounting for projected lifetime inflation, a healthy retired couple at 65 can expect $600,000 in health-related expenses alone. 

By John Manganaro | September 08, 2017
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HealthView Services has published the 2017 Retirement Health Care Costs Data Report.

Similar to other recent research results, the findings frankly are grim in many respects for retirement savers. At a minimum, the research suggests retiree health care expenses will rise at an average annual rate of 5.47% for the next decade or more. Such a rate is almost triple the U.S. inflation rate from 2012 to 2016, which stood at a mere 1.9%, and more than double annual projected Social Security cost-of-living adjustments retirees can depend on.

Other findings show, because of longer life expectancies, women will continue to pay more for total lifetime health care than men.

It’s not all bad news, however. Beyond making a strong argument for the use of long-term health savings accounts to address the massive amounts of cash retirees are expected to spend on health care, for the first time, the 2017 Report highlights and quantifies the real and measurable financial benefits associated with behavior modification.

“Americans are not powerless when it comes to reducing costs … Current data show that Americans with specific medical conditions, such as type II diabetes or high blood pressure, have some control over their longevity and health expenditures if they actively change behaviors and follow prescribed treatments,” the firm reports. “Those who manage their conditions can extend life expectancies, save money, and offset future medical expenses.”

The report points to one case study involving a 50-year-old with type II diabetes. Proactive management of the condition can mitigate the associated treatment expense and increase annual in-retirement income by almost $17,000. Naturally, some potentially difficult lifestyle changes and careful adherence to diabetes-care protocols will be required, but it should be encouraging to see that real solutions are possible, even for those with challenging medical conditions.

NEXT: Specific expense projections are sobering