Why the health cost slowdown is great for grandparents

May 16, 2013

The recent slowdown in health care costs matters a lot for the federal government, which buys health benefits for tens of millions of Americans. It also turns out to matter significantly for retirees.

A couple retiring this year are projected to need $220,000 to cover their health care costs, a decrease of 8 percent from the $240,000 that Fidelity projected for those leaving the workforce in 2012.

For the past decade, the Wall Street Journal reports, this number has increased by about 6 percent annually. So to see it drop isn't exactly normal. It's largely due, Kelly Greene writes, "to lower-than-expected Medicare spending in recent years, as well as a reduction in projected Medicare spending in the near future" and "smaller payment increases to hospitals, doctors and health plans."

Even with Medicare coverage, American seniors do end spending a significant amount on medical bills. This chart from the Fidelity report shows that retirees over 65 spend more on health care than food:


A quarter of all Medicare beneficiaries spend all their assets on health care in their last five years of life. While Medicare does provide coverage to seniors, there is still a significant amount that the program does not cover, left over for seniors to pay.

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Dylan Matthews · May 16, 2013