Baby Boomers and healthcare costs are an important topic nationally – and for individual businesses. Let’s take a broad look at relevant, related issues as well as what they mean for business leaders.
Boomers, by the numbers
Last year marked an important date for the health care industry in the United States. In 2011, the first of the Baby Boomer generation reached retirement age. There are currently 78 million Americans who were born between 1946 and 1964, and as they gradually transition out of the workforce and into retirement, the predictions regarding their effects on national health care costs are ominous to say the least.
In 2012, Boomers are reaching the age of 65 at a rate of over 10,000 per day. The inevitable increase in demand for health care could push America’s current health care system to its breaking point, resulting in higher inflation, higher taxes or reduced health benefits for everyone.
Baby Boomers and healthcare costs
The Congressional Budget Office (CBO) reported that spending for Medicare, Medicaid and total health care costs accounted for 3 percent each of the gross domestic product (GDP) in 2009. If a change is not implemented by 2035, spending for Medicare alone will increase to 8 percent, and by 2080, will reach an astonishing 15 percent.
Exorbitant health care costs are not the only problematic issue the U.S. will face as the Baby Boomers reach retirement age. According to a report from the Institute of Medicine (IOM) entitled “Retooling for an Aging America: Building the Health Care Workforce,” aging Boomers are facing a health care system far too small and unprepared to meet their needs. Despite the rapid increase in the country’s senior population, the number of geriatricians is actually decreasing. Taking into consideration the increased life expectancy of today’s seniors, coupled with the disproportionately large utilization of health care resources by the elderly, it is not hard to see the issues America’s health care workforce stands to face in the near future.
Regarding solutions to the problems at hand, LeadingAge, an association of 5,600 not-for-profit organizations dedicated to making America a better place to grow old, predicts that a consumer-driven model will replace the current service model for aging services, with other technologies greatly improving an individual’s ability to remain independent. Prevention, rather than crisis care, will emerge as the new focus of aging services.
According to Barbara Bradshaw, CEO of Eben Ezer Lutheran Care Center, “The goal of reforming the Medicare program is based on a triple aim. Number one is better health through education and preventative strategies; second is to reduce the cost; and third is to improve the quality of health care services.”
Despite the trepidation the influx of Baby Boomers has brought the health care system, their arrival will bring with it positive effects as well. The exploding Boomer population will bring about a demand for technological innovation.
According to age researcher Joseph Coughlin, speaker at a panel discussion on health care and technology sponsored by the New England Business and Technology Association, the numbers of economically wealthy older people will provide business opportunities. Grocery stores and pharmacies will have to pay more attention to the aging population than they ever have before. Companies that have never been involved in health care in the past will move into the health, wellness and vitality industry.
Also, according to Coughlin, shared access to digitally stored medical records will be necessary to enable the public to choose from the plethora of health care services available to them. Today, shared access to medical records is restrained due to competition and privacy issues. In the future, however, public reporting of information on hospitals’ physicians will allow the consumer to pick and choose, and make an educated decision on his or her healthcare services based on quality.
Now more than ever it is important for individuals and small business owners to weigh their options for affordable health care and plan for the future.
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