Good Health Raises Lifetime Care Costs

No good deed goes unpunished. According to the Center for Retirement Research at Boston College, healthier people actually will incur higher health care costs during their lives than people who are unhealthy. This flies in the face of many of my bromides in past columns about the financial benefits of taking good care of yourself. So, perhaps I should be leading the charge to a nearby all-you-can-eat restaurant?

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Nope. The main reason that healthier people have higher medical expenses over their lives, the CRR research found, is that they live a lot longer. Because of this longevity, they are more likely to need nursing home or other long term care, which is very expensive.

"At age 80, people in healthy households have a remaining life expectancy that is 29 percent longer than people in unhealthy households, and, therefore, are at risk of incurring health care costs over more years." the CRR study says. Chronic diseases will eventually afflict these healthy people as they move into their 80s and become frail.

Here are the CRR projections of remaining lifetime health care costs, in 2009 dollars, of couples who reached the indicated ages last year:

Age      Healthy      Unhealthy
65       $260,000     $220,000
70       $266,000     $241,000
75       $265,000     $236,000
80       $259,000     $220,000
85       $244,000     $202,000

Looking at current health care costs, it turns out that healthier people actually do face lower annual bills than unhealthy people. But as you extend this side-by-side look into the future, the healthy people keep incurring expenses every year. And the unhealthy people? Well, they're likely to have died.

[See Long Term Care Costs Cheapest at Home.]

Now, it is certainly true that death really drives down those pesky health care costs. But I wouldn't recommend it as a lifetime strategy.

However, the CRR findings are a useful wake-up call to people thinking about their future health insurance needs. Being healthy today and taking great care of yourself is no excuse for scrimping on your insurance protection. You're going to need it, and if you wait until you finally become ill and frail, you may not be able to qualify for the private insurance plans you'd want to supplement Medicare coverage.

"Households that delay purchasing insurance until their health declines run the risk of facing higher pre­miums, or for long-term care insurance, being denied coverage altogether," the study says. "Therefore, households that do not buy Medigap when they first join Medicare run the risk of facing substantially higher premiums, as do households of any age that postpone buying long-term care insurance."

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