How much is enough?: the distribution of lifetime health care costs
- Collection:
- Health Policy and Services Research
- Series Title(s):
- Center for Retirement Research working paper
- Contributor(s):
- Webb, Anthony. Zhivan, Natalia. Center for Retirement Research at Boston College.
- Publication:
- Chestnut Hill, MA : Center for Retirement Research at Boston College, c2010
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Financing, Personal Health Care Costs Retirement -- economics Long-Term Care -- economics Models, Economic Humans United States
- Genre(s):
- Technical Report
- Abstract:
- Estimates of the expected present value of lifetime out-of-pocket medical costs from age 65 onward are of limited value to households managing wealth decumulation in retirement. Their risk characteristics may differ from the average. They will also care about the whole probability distribution of health cost outcomes, and will want to update that probability distribution during the course of retirement. Using Health and Retirement Study data, we simulate health, mortality, and health cost histories of retired households. We show that the life expectancy and average health costs of our simulated households closely match published life tables and the findings of previous research. Using our simulated data, assuming a 3-percent real interest rate and including Medicare and private insurance premiums, we estimate that a typical household age 65 has a 5-percent risk of the present value of its lifetime health care costs exceeding $311,000, or $570,000 including the cost of long-term care. We find that relatively little resolution of uncertainty occurs with age, even for those who remain free of chronic disease.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
- Illustrations:
- Illustrations
- NLM Unique ID:
- 101546820 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/101546820