Exploring Human Potential

How Long Will I Live And How Much Will It Cost?

Posted on | February 27, 2012 | 4 Comments

Mike Magee

People are getting older and they want to age in place at home. No news there! But in the past the weight of financing this choice fell heavily on the shoulders of families who provided a large portion of the dollars and the heavy lifting as part of the unpaid informal family caregiver network. But now the market is beginning to shift dollars away from nursing homes and toward care teams organized to deliver home-based services. And the numbers look pretty good.

For one New York City care network, they will receive $7300 a month per patient cared for in the home from Medicare and Medicaid. Federal and state government are happy to pay since they used to provide $9000 per month for the same patient in a nursing home. No surprise then that in New York State alone, some 80,000 nursing home patients are expected to be discharged back to home-based settings over the next few years.(1)

Do we know how long today’s senior will live and what it will cost? Not exactly, but pretty close. Life expectancy has increased dramatically in America in the past 50 years, and the reasons are no mystery. First, we increasingly understand the causes of major killers like heart disease and have made adjustments. We smoke less, eat somewhat healthier, treat high blood pressure and high cholesterol, and at least know we should be exercising. Second, we seek early diagnosis and treatment of chronic diseases, support and fund research, and practice cancer prevention.(2)

With just these changes we’d be seeing increases in the numbers of citizens over 65. But add to these the well publicized “baby boomers,”  and you have an “elder surge.” We’ve known for some time that Medicare funding was falling behind. (3,4)

If people are going to live longer and Medicare is already underfunded, what will be the economic repercussions? That’s a question James Lubitz and his colleagues at the Centers for Disease Control and Prevention (CDC)’s office of Analysis, Epidemiology and Health Promotion explored in 2003. They studied 12,500 Medicare beneficiaries. Medicare covers 96% of Americans over 65, and databases track costs and health status. (5)

Good measures currently exist through Medicare for quantifying health in aging Americans. They come organized in three differing sets of capabilities. The first is the Nagi measure. Nagi activities are a measure of baseline ability and include the ability to stoop, crouch and kneel; to lift 10 pounds of weight; to raise your arms above your shoulders; to grasp small objects; and to walk two to three blocks. Problems with one or more of these suggest mild disability. (6)

The second measure is Instrumental Activities of Daily Living, or IADLs. These activities include using the telephone, doing housework, preparing meals, shopping for needs and managing money. Problems with one or more IADLs suggest moderate disability.

The third measure is Activities of Daily Living, or ADLs. ADLs include bathing, dressing oneself, feeding oneself, rising in and out of a chair or bed without help, and basic toileting. Inability to handle ADLs suggests more severe disability.

At age 70, the absence of any disability predicts better-than-average future health, more years of life than average, and lower annual cost for health care. Life expectancy after 70 for such individuals is 13.8 years, with 8.3 of those years active and fully independent. The total future cost for health care from age 70 to death for a healthy, vital individual (according to the analysis in 2003) will be an average of $136,000. $44,000 of those dollars will be spent while the individual is healthy or possesses a minor disability. $60,000 will be spent once there is need for help with IADLs or ADLs. And $32,000 will be spent for institutional care at the end of life. (5)

In contrast, if you have difficulties with one or more ADLs at age 70, your life expectancy is only 11.6 years, with only 4 of those years active and independent. The average cost from age 70 to death is $145,000. In fact, lifelong cost of care tracks well with levels of disability at age 70. Care for an individual with no limitations carries a lifelong cost after 70 of $136,000 dollars; moderate disability, $141,000; severe disability, $145,000; and, if needing institutional care at age 70, an average patient will expend $220,000 before death. (5)

The status of a person’s health at age 70 doesn’t affect the amount of time a person spends in institutional care at the end of life. Regardless of one’s health status, and regardless of how many additional years a person will live, each will spend an average of approximately 0.8 years in institutional care before death. (5)

In analyzing the 12,500 patients in the 2003 study, the average years lived after 70 for the whole group was 13.2 years. These years included 2.5 healthy years, 4.4 years with mild limitations, 1.8 years with moderate needs, 3.7 years with severe limitations, and 0.8 years in institutional care. (5)

So what does all this tell us? First, it tells us that living more years in good health is no more expensive than living fewer years in poor health. Second, it tells us that living more years in good health is not less expensive than living fewer years in poor health, because even though the annual cost is less it is multiplied by more years. So if financial planners for Medicare think that an increasingly healthy and vibrant boomer population will help relieve some of the financial pressure placed on the system by aging demographics, they need to rework their numbers. Boomers’ healthcare will cost about the same as their parents’ care. (7,8)

What the actions in New York City tell us is that state and federal governments have absorbed the message of the 2003 study, that “better health results in longer life, but not in higher (or lower) costs.” That being the case, the only way to effectively manage the health costs of aging is to move the care toward a more efficiency, safer, and happier place. As many of us have said over the past decade – that place is the home.

For HealthCommentary, I’m Mike Magee


1. Berger J. A shift from nursing homes to managed care at home. NYT. Feb. 24, 2012. A21.

2.Health, United States, 2001: With urban and rural health chart book. Hyattsville, MD: National Center for Health Statistics, 2001.

3.Board of Trustees, Annual report, March 19, 2001. Washington, D.C.: Federal Hospital Insurance Trust Fund, 2001.

4.Centers for Medicare and Medicaid Services. Technical panel to review Medicare trustees report.

5.Lubitz J et al. Health, life expectancy, and health care spending among the elderly. New England Journal of Medicine. 349:1048-1055. 2003

6.Nagi SZ. An epidemiology of disability among adults in the United States. Milbank Mem Fund Q 1976;54:439-467.

7.Waidmann TA, Liu K. Disability trends among elderly persons and implications for the future. J Gerontol B Psychol Sci Soc Sci 2000;55:S298-S307.

8.Pope AM, Tarlov AR, eds. Disability in America: Toward a national agency for prevention. Washington, D.C.: National Academy Press, 1991.


4 Responses to “How Long Will I Live And How Much Will It Cost?”

  1. Gail hunt
    February 27th, 2012 @ 2:12 pm

    Wonderful article,

  2. robert kelly
    February 27th, 2012 @ 10:08 pm

    hello this is a great idea i live in ontario
    canada do you know if we have this it would nice having someone out to let them enjoy their
    life until the day comes for them to joint their love ones

  3. shoshan Shacham
    February 27th, 2012 @ 11:31 pm

    Dear Dr Mike Magee
    To my view yours obsevation and insights are truly addresing the Disruptive Demographic challanges of the Eldely society in the 21st century.

    As a 70+ (1.4.1941)and IBM Veteran (1972-2002) I am the founer of A First of A kind Bussiness Social entrupreurship to adrees the Challange

    Homage for Life (HFL) is an outcome of 6 years Multi i Discipline efforts in the Aging in Place industry. HFL is a Personalized Best Practice Service Platform for Independence Living – Active Aging Active Health .HFL is the Innovative ” I –Aging” to address the 21st industry Disruptive Demographic

    Challenge – Independent Living

    Shoshan Shacham

  4. Mike Magee
    March 8th, 2012 @ 12:18 pm

    Thanks, Gail!

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