Medicare and Medicaid Spending Continue to Surge/Oldest Baby Boomers Hit 65+ Years of Age

The term “Baby Boomer” generally refers to people born from 1946 to 1964. The phrase evolved to include the children of soldiers and war industry workers who were involved in World War II. When those veterans and workers returned to civilian life, they started or added to families in large numbers. As a result, the Baby Boom generation, at one time as large as 78 million, is one of the largest demographic segments in U.S. history.

Medicare: Today, roughly millions of Americans reach traditional retirement age (65) yearly, which is also the age that Medicare coverage kicks in for a typical retiree, subject to meeting eligibility rules. The increased load on Medicare is immense. At the same time, this surging senior population will put a greater strain on virtually all sectors of the health care system. Medicare enrollment in 2023 was estimated by the U.S. Centers for Medicare and Medicaid Services to be 66.6 million compared to only 47.4 million in 2010. Total expenditures on Medicare patient care were nearing $1.02 trillion in 2023.

Medicare expenditures cover a wide range of patients varying in age and levels of disease, with most spending devoted to the very old and those with a number of chronic conditions. An estimated 25% to 30% of all Medicare spending is for patients in their last year of life. Meanwhile, 21% of Medicare beneficiaries have five or more chronic conditions such as high blood pressure, heart disease or diabetes.

Medicaid: Medicaid was envisioned as a safety net for the poor. Today, while Medicaid covers many of the health needs of low-income households, a vast portion of this program covers nursing home care for seniors and the seriously disabled. In fact, Medicaid pays about 40% of America’s total spending on long-term care. Enrollment in Medicaid and CHIP (Children’s Health Insurance Program) combined was estimated by Plunkett Research at 83.3 million for 2023.

Medicaid/CHIP is administered largely at the state level, with major financial support coming from the federal government. The states are straining under costs that have been soaring over the long term. according to the U.S. Centers for Medicare and Medicaid Services (CMS). While most of the money is provided by the federal government, states are required to provide a significant portion.

A serious problem facing both Medicare and Medicaid is fraud. The former head of the CMS and analysts at the RAND Corporation estimated that fraud, along with the costs associated with rules and inspections to fight it, added as much as $98 billion in a recent year to Medicare and Medicaid spending, and $272 billion in costs across the entire U.S. health care system. Numerous cases, including a Miami doctor who fraudulently billed for 1,000 powered wheelchairs, and a New York clinic that wrote fake prescriptions for approximately 5 million painkillers and then sold them on the street for between $30 and $90 each, have come to light under heightened federal screening. Fortunately, advanced software based on machine learning has the potential to spot fraudulent claims on a much faster basis than in the past. Nonetheless, the system will remain very tempting to criminals due to its lack of effective controls and vast total spending.

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Medicare and Medicaid Spending Continue to Surge/Oldest Baby Boomers Hit 65+ Years of Age, Business and Industry Trends Analysis

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