How is the baby boomer retirement crisis changing the healthcare landscape?

As more and more baby boomers reach retirement age, the healthcare industry must adapt to meet their growing need for healthcare services. Baby boomers, those born between 1946 and 1964, are projected to retire later and live longer than previous generations. As their demand for health services grows, medical providers and policy makers are looking for innovative solutions to meet this aging population’s needs. 

Learn more about the baby boomer retirement crisis, the effects baby boomers are having on healthcare systems, and how healthcare leaders can prepare to meet these challenges. 

The retirement crisis and rising healthcare costs

The U.S. labor force is losing millions of baby boomers to retirement each year. According to a Pew Research Center analysis, over 40% of all baby boomers were retired as of September 2020. The pace of retirement among baby boomers continues to rise: In 2019, 1.5 million more boomers retired than in the year before. In 2020, that number jumped to 3.2 million more. 

Experts anticipate the influx of retiring baby boomers will soon lead to healthcare expenses that will outstrip what most retirees have in savings. As a result, healthcare providers worry about preserving accessible and affordable healthcare for everyone. 

The rising costs of healthcare

The baby boomer retirement crisis means that we are likely to exceed the capacities of our current healthcare system. Baby boomers tend to live longer and experience higher rates of obesity, hypertension, high cholesterol, and diabetes than previous generations. These chronic conditions require expensive treatment and care. 

Add to this the bloating cost of health services. According to reports by Health Catalyst, costs of both inpatient and outpatient healthcare services have increased nearly 200% in the past two decades — a cost consumers often bear through copayments and other out-of-pocket expenses. The costs of prescription drugs, caregiving services, and skilled nursing facilities also doubled in recent years. 

Most retirees are not prepared to pay for healthcare

Although rising healthcare costs pose a challenge for all patients, boomers are an especially vulnerable group. 

According to Fidelity Investments, a retired 65-year-old couple in the U.S. should anticipate $275,000 in out-of-pocket healthcare costs after retiring — not including rehabilitation or long-term nursing care. Forbes speculates that only 50% of boomers will be able to afford their own healthcare. 

Addressing the retirement crisis head-on

The healthcare system must prepare for the baby boomer retirement crisis. In order to provide long-term care for baby boomers, the U.S. healthcare system will need to adapt to bear the strain of increased health costs and the needs of this large and unique generation. Such adaptations include:

How to improve healthcare delivery for baby boomers

It is clear that the healthcare system needs to adapt in response to the rising number of retiring baby boomers. Here are some practical steps the healthcare system can take to accommodate this large, aging population. 

1. Grow the healthcare workforce

Many baby boomers have had long careers in healthcare services. As these individuals retire, new healthcare leaders must emerge to fill open positions at hospitals, clinics, long-term care facilities, and other healthcare settings.  

The New York Times points out that there is already a shortage of pharmacists, nurses, healthcare aides, and social workers with specialized training in elder care. The healthcare industry must train more workers to prepare for the baby boomer retirement crisis. 

2. Train more care providers to support aging at home

Many baby boomers are choosing to remain at home in their old age rather than move to retirement communities or assisted living facilities. 

Baby boomers value their independence. Although many solo boomers prefer to live in single-family homes, older adults who live alone tend to struggle more with tasks such as managing medications, withstanding wounds, and getting proper nutrition. They are also more susceptible to scams and often suffer from loneliness. 

The healthcare industry needs to incentivize preprofessionals to specialize as geriatric nurses and other caregiving roles in order to meet the needs of baby boomers who wish to remain at home. 

3. Leverage new healthcare technologies

The baby boomer retirement crisis offers exciting opportunities for telehealth and emerging healthcare technologies. 

Baby boomers are open to using new technologies that make healthcare more convenient and affordable. Advancements in telehealth connect patients with doctors in real time from home, saving time and money while also helping detect health issues early. 

Mobile and online platforms facilitate communication between patients and their doctors. With encrypted, cloud-based storage, baby boomers can easily access their health histories and treatment plans through easy-to-use digital devices. Digital technologies that evolve with customizable digital health platforms can also provide them with a sense of independence and agency regarding their health. 

Some desirable telehealth components for baby boomers include:

4. Develop dignified, affordable residential communities

The baby boomer retirement crisis poses questions about where retirees will live once they require extensive medical care. Although many baby boomers will prefer to remain at home, the need for senior living communities will likely increase. 

Around 40% of baby boomers over 65 currently live alone, according to the Pew Research Center. Twenty percent of baby boomers have no children, and yet another 20% are aging alone without a partner or nearby family. This means that many older adults cannot rely on the traditional safety net of close family to care for them as they age. 

To combat what some have called an “epidemic of loneliness,” many baby boomers are choosing to live communally in their golden years. 

Healthcare administrators and developers can keep the specific wants and needs of baby boomers in mind as they create functional, modern facilities distinct from traditional assisted living facilities. Senior living communities may be especially attractive to baby boomers if they include:

The biggest barrier keeping older adults from living in such residential communities as they age will be cost. Healthcare facilities should offer flexible financing options to make these communities more accessible to people from different income groups. Shared units, and spaces that cater to roommates in addition to couples, may also help to make senior living facilities more affordable. 

Pursue a career in healthcare management

Healthcare is reaching a tipping point. Healthcare leaders must have the skills and training to address the baby boomer retirement crisis and make institutions more efficient and flexible. 

If you’re interested in leading a positive impact in healthcare, explore the Master of Business Administration in Healthcare offered by Northern Arizona University, in partnership with OpusVi. This online degree program is informed by leading healthcare industry experts and features foundational business courses recontextualized within a healthcare context. Through a blend of lecture-based courses, an applied practicum, and direct engagement with healthcare professionals, our MBA in Healthcare will arm you with the leadership, communications, and collaboration skills to affect meaningful change in healthcare at an organizational level.

Sources:

• Centers for Medicare & Medicaid Services, January 2021 Medicaid & CHIP Enrollment Data Highlights
• Forbes, “After One Year of Covid-19, America’s Retirement Crisis Is Little Changed”
• Forbes, “Is the Assisted-Living Community Ready for Solo Agers and Baby Boomers?”
• Forbes, “Studies Confirm That Half of Americans Struggle with Retirement”
• Global Encyclopedia of Public Administration, Public Policy, and Governance, “Silver Tsunami of Retirement: Implications for Consideration”
• International Review of Business and Applied Sciences, “Baby Boomer Employees’ Influence Upon the Health Care Sector”
• JAMA Health Forum, “Saving Medicare for Baby Boomers and Beyond — A Looming Fiscal Crisis”
• Pew Research Center, “The Pace of Boomer Retirements Has Accelerated in the Past Year”