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Healthcare Spending For Seniors Increases $100B In 10 Years

Armen Hareyan's picture
Elder care spending

Health care spending for seniors rose steadily from 1996 to 2006, according to a report from the Agency for Healthcare Research and Quality.

The U.S. spent an estimated $333.3 billion on health care for people 65 and over in 2006. The amount was over $100 billion higher than inflation-adjusted expenses for 1996. Within that 10-year period, health care spending for Americans aged 65 and older rose by slightly more than $2,000 per person, from about $6,989 to $9,080 after adjusting for inflation.

Dramatic cost increases were found in a number of different areas of spending, according to the report. Prescription drug purchase costs rose by 66% from $105 to $174, while the price of a physician office visit increased by 58% from $114 to $180. The average daily cost of a hospital stay for seniors rose 20% during those years, from $2,271 in 1996 to $2,714 in 2006.

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In 2006, the median annual health care expenditure for persons age 65 and over was $4,032 (figure 2), with about one-quarter of the elderly having no expenses or expenses under $1,752 (25th percentile) and one-quarter having expenses over $9,289 (75th percentile). These quartile levels were at least 50 percent higher than in 1996 (after adjusting for medical price inflation from 1996 to 2006).

The proportion of the elderly with emergency room expenses was notably higher in 2006 (20.4 versus 13.2 percent in 1996) and the proportion with home health expenses was somewhat lower (10.7 versus 13.2 percent).

Among persons age 65 and over, the portion of total expenses accounted for by inpatient care declined between 1996 and 2006 (43.2 versus 37.2 percent) while the portion for ambulatory care increased (from 23.4 to 28.7 percent). Home health care and prescribed medicines showed relatively larger shifts, with prescribed medicines rising from 12.7 to 22.0 percent and home health care decreasing from 14.9 to 6.6 percent of total expenses for the elderly.

The average expenditures per prescription medicine purchase and per office physician visit for elderly persons in 2006 were notably higher than the corresponding inflation-adjusted averages for 1996 ($174 versus $105 and $180 versus $114, respectively). The average expense for a dental visit among persons age 65 and over was also significantly higher in 2006 ($254 versus $187 in 1996 after adjusting for inflation).

Written by Jesse Slome from the American Association for Long-Term Care Insurance