Study: Many Americans fear Medicare won’t be there when they need it

Americans are increasingly concerned about the future of Medicare, with nearly two-thirds (63%) fearing that the program will not be around when they need it, according to the annual Nationwide Retirement Institute Health Care Costs in Retirement survey. When asked about their biggest retirement-planning stressor, one in five (20%) selected Medicare running out of money.

As Americans’ fears about the long-term solvency of Medicare grow, many want meaningful reforms. When thinking about this year’s U.S. Presidential election, more than two in five (42%) said the top health care priority for the next administration to address should be ensuring Medicare's stability. This is just behind lowering out-of-pocket health-care costs (43%) and reducing prescription drug prices (43%).

Notably, these reforms have some bipartisan support for the next administration to address, with 47% of Democrats and 43% of Republicans prioritizing Medicare’s stability, and 47% of Democrats and 44% of Republicans wanting lower prescription drug prices to be addressed.

"Concerns about the future of Medicare are adding another layer of uncertainty for Americans as they consider how they’ll manage health care costs in retirement,” said Kristi Martin Rodriguez, senior vice president of the Nationwide Retirement Institute. “With high living costs already squeezing household budgets, many are worried about having enough saved to cover their long-term health care. Given the current pressures and potential for future health care cost increases, it is never too early to begin planning for health care expenses in retirement.”

Why consumers are fearful

But why are so many consumers fearful of Medicare’s future? “As the 2024 presidential election approaches, Medicare’s solvency has become a critical issue for many Americans,” said Rodriguez, in explaining some of the reasons for consumers’ fears. “More than three in five adults (63%) worry that Medicare won’t be available in the future when they will need it.”

Misconceptions about Medicare could be driving this concern, Rodriguez added. “Nearly three in four (72%) mistakenly believe Medicare covers long-term care. It doesn’t. And half of Americans mistakenly believe you can enroll at any time. You cannot. Two in three (67%) said they wished they understood Medicare coverage better. But these feelings of doubt shouldn’t deter people from planning for future health-care costs,” she said.

More takeaways from the survey

Rodriguez also shared some additional takeaways from the survey. It reveals, she said, how the financial impacts of health care in the present day—from rising costs, to increased debt burdens—are affecting the ability of many people to save for tomorrow. In fact, she said, almost half of the adults who were surveyed (49%) said that they have drastically reduced how much they have saved or will be able to save for retirement because of current medical and health care expenses.
And more than two in three (67%) are afraid that a major health issue could jeopardize their finances for years. “This is concerning,” Rodriguez pointed out, “because one in four (25%) have canceled or are considering canceling/postponing their annual physical – which is not advisable or ideal to manage cost in this manner.”

Helping clients manage their fears and health-care costs in retirement

In addition, Rodriguez shared a few steps advisors can take to help clients manage their fears and health-care costs in retirement. Over four in five adults (83%) of those surveyed agreed that managing health-care costs should be part of personal financial planning in retirement, and more than 2 in 3 adults (68%) would switch to another financial professional if their current one could not show them how to navigate their Medicare choices, she said. “A good place to start is addressing some misunderstandings that clients may have about health care (and LTC) in retirement and Medicare,” she added.

According to Rodriguez, the most popular Medicare topics that people want to learn about from a financial professional when discussing retirement planning include:

• Overall costs of Medicare coverage (41%)
• What the different parts of Medicare (A, B, C, D and Medigap) cover (37%)
• Out-of-pocket costs, depending on the Medicare plan they have (34%)

“Financial professionals can enhance the value they bring to their client relationships by helping to fill this knowledge gap and work with clients to develop plans to cover major expense they’ll face in retirement,” Rodriguez said. “And tools such as the Nationwide’s Health Care Cost Estimator can help them present a more accurate picture of a client's expected retirement health-care needs and expenses.” Nationwide’s Health Care Cost Assessment tool.

The promise of AI

In addition, the survey pointed out that artificial intelligence offers promising solutions, potentially making health care more affordable, while transforming the industry. By automating routine tasks and enhancing diagnostic accuracy, AI has the potential to improve patient outcomes and streamline care delivery. Many Americans share this optimism, the survey said, with 53% of respondents expecting AI to enhance the quality of health care, 45% believing it will discover cures for chronic conditions that they may develop in the future, and 33% believing that AI could extend their life expectancy. Those who expect that AI will add to their lifespans expect that it will add approximately 10 years on average.

Financial professionals can learn more about simplifying retirement health care cost planning here.  The Harris Poll, on behalf of Nationwide, conducted an online survey among 1,692 adults ages 18+ who are residing in the U.S. from July 9-31, 2024.

© Entire contents copyright 2024 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].