By the time baby boomers need old-age homes, nursing home costs--and how they are paid for--may rival hospital and physician expenditures as drivers of healthcare policy.
That's one conclusion to draw from a study published in the May 11 New England Journal of Medicine, which found that healthcare expenditures for long-term care will rise faster than acute-care expenditures as the population ages.
By 2015, payments for hospital and other Medicare-covered services are still expected to dwarf those for nursing home care.
But nursing home expenditures will rise 6%, to $46,168 per person, compared with a negligible increase to $109,352 per person for Medicare-covered expenditures.
The authors of the study, health policy analysts Brenda Spillman of the Urban Institute in Washington and James Lubitz of the National Center for Health Statistics in Hyattsville, Md., say longevity is what's driving the faster rate of increase for nursing home spending.
Projections from the Social Security Administration say a 65-year-old today can expect to live about a month past his or her 83rd birthday. A person turning 65 in 2015 can plan to live about eight months beyond an 83rd birthday. The longer people live, the more significant the costs of nursing home care.
In fact, Spillman and Lubitz found that the cumulative cost of long-term care for the very old can actually exceed the cumulative cost of acute care.
A person who dies at age 85 typically racks up about $123,722 in Medicare-covered services, but only $39,009 in nursing home care. But if that person lives to age 100, Medicare expenditures will total $130,910, compared with nursing home costs of $163,563.
Those changes could boost the importance of the nursing home lobby in Washington, a group that historically has played second or even third fiddle to the much larger hospital and doctor groups in town. The American Hospital Association, for instance, had revenue of about $78 million in 1998, according to documents filed with the Internal Revenue Service. The American Medical Association's revenue topped $235 million. The comparatively tiny American Health Care Association, which represents about 12,000 nursing homes, had revenue of about $21 million.