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Analysis and Forecast of Nursing Care Costs

Bernard F. Pettingill, Ph.D. and Federico R. Tewes, BA

Since 1970, health spending growth has outpaced the growth of the United States economy as measured by the Consumer Price Index (CPI). In 1970, total national health expenditures as a percent of Gross Domestic Product (GDP) was 6.9%; total national health expenditure in 2018 represented 17.7% of GDP. The recently released National Health Expenditure (NHE) data from the Centers for Medicare and Medicaid Services, after being updated and organized by the Peterson-Kaiser Family Foundation Health System Tracker confirm these figures.1 Four decades have passed between 1970 to 2020, and the long-term effects of medical inflation versus national inflation can only be compared in constant dollars. In short, the Health System Tracker values use constant 2018 dollars to compare 1970 figures ($385 Billion) against the present value of 2018 figures ($3,649 Billion). This means the total national health expenditure in 2018 is 947% larger than it was in 1970.

According to this study, “On a per capita basis, health spending has increased 31-fold in the last four decades, from $355 per person in 1970 to $11,172 in 2018.

In constant 2018 dollars, the increase was 6-fold, from $1,832 in 1970 to $11,172 in 2018.”

2 The total health expenditures represent the amount spent on healthcare and health-related activities, including expenditures from both public and private funds. You’ll be posting loads of engaging content, so be sure to keep your blog organized with Categories that also allow visitors to explore more of what interests them.

Despite the above salary forecasts for 2030, the Centers for Medicare and Medicaid Services forecast that as Baby Boomers age, Medicare enrollment is projected to grow to over 80 million people. Of these aging Baby Boomers, 40% are expected to have diabetes, 43% are expected to have heart disease, and 25% are expected to have some type of cancer. Additionally, the percentage of Medicare beneficiaries with three or more chronic conditions is projected to increase from 26% in 2010 to 40% in 2030. These forecasting figures do not include degenerative and debilitating diseases like Alzheimer’s, which accounted for 32% of people over 85 years of age in 2016.12 Facing these challenging predictions of 80 million Medicare enrollees by 2030, it is clear that the 3.6 million projected demand for RNs in 2030 will translate into a tragically abysmal ratio of 22 patients for every RN employed.

The article concludes by stating: “The retirement of one million RNs between now and 2030 means the years of nursing experience and knowledge accumulated will be lost to the nursing workforce as these RNs exit the workforce.”14 This is a very important loss because experienced RNs are more likely to be more adept at identifying complications and unexpected changes in patient conditions sooner than younger RNs. Also, experienced RNs can quickly respond to the appropriate treatment interventions.

In 2014, the average loss per claim settled for hospital workers’ injuries was

$15,860 (2011 dollars).15 According to BLS, hospital workers suffered 294,000 nonfatal workplace injuries and illnesses in 2014,16 for which the information was available.

Adjusting the average loss per claim settled for hospital workers’ injuries from 2011 dollars to 2014 dollars results in a figure of $16,692.00; thus 294,000 nonfatal workplace injuries would have cost the hospital industry $4.9 Billion annually (if those cases resulted in settled claims). Furthermore, the buying power of $15,860 in 2011 is predicted to be equivalent to $24,458 by 2030. Assuming that the same ‘flat’ 294,000 nonfatal workplace injuries had occurred, it would cost the hospital industry $7.2 Billion annually by 2030. This is an unthinkable drain on the health care system.

Additional factors causing challenges for the future nursing workforce by 2030:

Decreased levels of physical activity, with an increased level of overweight individuals and an alarming rate of obesity. As elderly obesity increases, it is understandable that the projected 2030 figures will be much worse than the current level of 6.0 cases of occupational injuries per 100 full-time healthcare workers.

Increasing necessity to retain experienced RNs beyond current projected retirement ages. The limited number of Ph.D. educated nurses and a shortage of nursing clinical internships to educate future nurses also restricts supply.

According to the Health System Tracker, a 21.5 percent cumulative growth per Medicare enrollee spending has been determined in 2018. For Medicaid, a 12.5 percent cumulative growth in enrollee spending in 2018 was measured. Ten years earlier, in 2008, the cumulative growth per Medicare and Medicaid enrollee spending was zero percent.17

Elderly over 65 average $11,316 (2016 dollars) in health spending, which represents 36 percent of the share of total spending on health care. Forecasting this figure forward on a straight line trajectory means that the 80 million Medicare enrollees by 2030, this “Elderly over 65” category will incur health spending per capita of $19,360 (2030 dollars, using only a 4.75% future medical inflation rate annually). By 2030, Medicare will need more than $1.548 Trillion to service these 80 million enrollees. Indeed the future is disconcerning vis-a-vis RN’s, LPN’s, MD’s,and costs

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