Data shows that adults age 55 and over account for more than half of total health care spending in the United States. While this comes as no surprise due to the correlation between health decline and age, the increasing impact of health care costs on the older generation is troubling.
According to a Gallup and West Health survey, seniors withdrew an estimated $22 billion from their long-term savings to pay for health care in 2018. The same survey revealed that 7.5 million seniors are unable to afford their prescribed medicine and 80% of the prescriptions they cannot afford are for somewhat or very serious health conditions. These statistics are striking and have serious implications for seniors’ health and wellbeing.
Additionally, projections reveal that the number of Americans age 65 and older is projected to nearly double from 52 million in 2018 to 95 million in 2060, and 1 in 4 Americans will be part of this age group in 2060. With the nation’s Baby Boomer population growing older, now is the time to lower health care costs, especially for this demographic, to avoid the crisis from exacerbating. To do this, it’s important to increase seniors’ access to cost-saving opportunities through their Medicare Advantage plans.
As part of the CMS’s Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model, the agency will be testing complementary MA health plan innovations aimed to reduce the cost of care, improve the quality of care and improve the coordination and efficiency of care for Medicare beneficiaries. In this demonstration program, there’s a model to test the issuance of cash rebates to MA beneficiaries for seeking high value care in Medicare Advantage. Health plans that missed the 2021 deadline will be able to apply to participate in the program for the 2022 calendar year. These rebates, in the form of cash or monetary rewards, could save seniors hundreds or thousands of dollars on their medical care and help ensure they get the necessary care to stay on track with their health care journey, improving their overall wellness and outcomes.
I’m pleased to see this innovative model from CMS and hope to see the program expand in the future to enable more seniors to save money on their care. For example, adopting digital shopping tools that are easy to use and consumer-friendly could present a massive savings opportunity for older adults. In 2019, our SmartShopper digital shopping platform paid $4.7 million in cash incentives to consumers with an average claims savings of $654 per incentive paid. Health care shopping solutions have proven to drive down overall medical expenditures and the potential to lower medical expenditures for seniors is extremely promising. Our recent survey reveals seniors want to use these tools as well – 65% said having an online health care navigation tool that enables them to compare costs and schedule appointments would be helpful. In 2019, 21% of our SmartShoppers were age 60 and older, with 14% being females in that age group, and we hope to see these numbers grow through future collaboration in the MA space.
As the health care cost crisis persists, it’s important that we support the innovations in the Medicare Advantage VBID model and increase awareness around the cost impacts on seniors in order to drive down care costs in the MA space. I expect rebates to play a big role in helping seniors get high-value care and predict that future adoption of digital shopping platforms will help expand savings for this quickly growing demographic.