NCPA - National Center for Policy Analysis

Many Retirees Don't Realize They Will Have to Foot Rising Health-Care Costs

April 7, 2003

As medical inflation kicks in again, waves of employers are ditching or scaling back medical coverage for their retired workers. And studies show that a 65-year-old who retires today and lives to be 85 can expect to pay out around $100,000 for health care. Experts say many seniors don't realize that.

  • As of now, only about one-third of seniors enjoy any sort of job-based health coverage -- down from nearly 50 percent a decade ago.
  • While many seniors look to Medicare, it doesn't pay for prescriptions or catastrophic illnesses -- and most insurance plans to supplement Medicare rarely include drug coverage.
  • Even if prescription drug coverage is added to Medicare, it would subsidize only about 20 percent of drug costs.
  • Many companies have capped annual health payouts for retirees and about half of them have hit that ceiling -- which means that they must pay for rising costs in the future.

The upshot is that a great many seniors will find themselves underinsured, and most have not yet come to grips with that fact, health policy analysts warn.

Source: Howard Gleckman, "Old, Ill and Uninsured," BusinessWeek, April 7, 2003.

 

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