Helping People Find the Best Medicare Insurance
A fee-only financial advisor


Contact us by e-mail

Managing Medicare's Costs

Prevention, wellness programs, and retirement healthcare costs (1 of 2)

Do people with healthy lifestyles have lower healthcare costs during their retirement? It’s widely acknowledged that healthy lifestyles can often prevent or delay the onset of serious chronic diseases. And by not smoking, by avoiding excessive alcohol use, and by following basic guidelines about nutrition, exercise, and weight control, people improve their chances of avoiding one or more chronic diseases that typically account for the majority of retirees’ healthcare costs.

But even though they may be able avoid serious chronic diseases until very late in life, does that reduce their total healthcare costs during retirement? Because healthy individuals live longer than do people with serious chronic diseases, they will have additional years of paying health insurance premiums, deductibles, and other cost-sharing. And those added years could mean that healthy individuals will pay more over the course of their retirement. That’s the conclusion, at least, of a 2010 brief by the Center for Retirement Research.

The exorbitant costs of chronic illnesses are well known. In its section explaining Medicare’s preventive benefits, the government’s healthcare.gov web site cites a 2004 study which estimates that almost 80% of all healthcare spending in the United States can be attributed to potentially preventable chronic illnesses like cancer, diabetes, and cardiovascular disease. A more recent estimate from the Centers for Disease Control is in the same range, saying that in 2009 more than 75% of healthcare costs were due to chronic conditions, which also were responsible for seven in ten deaths.

More than 30 years ago, Stanford University physician James Fries suggested that healthy lifestyles and medical advances are squeezing the periods of serious chronic illnesses into increasingly smaller windows at the end of life. He said that longevity data indicate that healthy lifestyles don’t extend maximum average lifespans so much as they increasingly delay serious illnesses. And as serious chronic diseases are delayed until very late in life, people will die not from illness but from senescence as their bodies wear out. He coined the phrase “compression of morbidity” in a well-known article in which he explained his hypothesis – that the periods of chronic illnesses are shrinking at faster rates than the rates at which lifespans are lengthening.

If Dr. Fries’ hypothesis is true, it might have significant implications for retirement healthcare costs. It could mean that people who have healthier lifestyles and longer lifespans, because they are free of serious chronic diseases until the very end of their lives, have relatively low total retirement healthcare costs.

When Dr. Fries originally proposed the compression of morbidity theory, he based it on longevity data that was available at the time. That data tracked mortality rates and lifespans, but it did not track the incidence of chronic disease, and so there was no way to prove or disprove his theory.

Since the early 1980s, though, there have been two large long-term studies and several smaller ones that compare the disability and death rates of people participating in disciplined wellness programs to those of control groups. The wellness efforts were often ones that the participants implemented themselves by following a regimen of exercise and good nutrition.

Summarizing these studies in a 2008 interview, Dr. Fries said that disability rates for the wellness groups declined by about two percent and mortality rates by about one percent in the 25+ year period that the studies covered. He added that all of the studies’ findings supported the compression of morbidity theory, since the disability rates for people in wellness dropped twice as fast as did their mortality rates. For these individuals, the periods of serious illness and incapacity that frequently occurs in late life were compressed into shorter time frames.

The longest-running of these studies involved more than 1,700 University of Pennsylvania alumni who were first surveyed in 1962 and who then took part in annual follow-up surveys beginning in 1986. The study placed the alumni in one of three risk categories based on their body mass index, whether they smoked, and whether they exercised. Those who were in the high-risk category in either 1962 or 1986 had twice the cumulative disability of those in the low-risk category, according to a 1998 article abstracted here and co-authored by Dr. Fries.

Another large study involved people who exercised by running several times a week. A press release summarizing the findings of the Runners Study described it as having tracked 538 older runners along with a similarly sized control group of non-runners. The initial disability of the runners group occurred 16 years later than for the non-runners. And, as of the 19th year of the study, 34 percent of the non-runners had died, compared to only 15 percent of the runners. Dr. Fries summed up the results by saying , ““If you had to pick one thing to make people healthier as they age, it would be aerobic exercise.”

Even though they are likely to live longer, some healthy retirees will have lower total healthcare costs than will unhealthy retirees because they use fewer medical services. A 2003 study published in the New England Journal of Medicine examined seven years of Medicare cost data and found that people who had no disabilities at age 70 lived almost three years longer than those of the same age who had one or more disabilities. But even though they lived almost three years longer, the healthier group had lower overall medical spending.

It’s not likely that retirees skip desserts and go to the gym four days a week so that they can reduce their long-term healthcare costs. Instead, they pursue wellness programs, most of them self-designed, so that they will feel better and live longer. And regardless of their health, the type of coverage they have heavily influences their total retirement healthcare costs.

The most comprehensive insurance, for instance, usually has expensive premiums and low co-payments. And people with comprehensive Medigap plans may not have much or any cost-sharing regardless of the number of the medical services they use. Annual premiums for these Medigap policies are sometimes higher than the combined costs of premiums and out-of-pocket limits for employer and Medicare Advantage plans. In these cases, unhealthy people with lower-premium coverage will often spend less in a given year than healthy people do.

© 2010-2018 Dover Healthcare Planning, LLC | Contact Us