Seniors' Healthcare Costs Soar, Even With Inflation Adjustment

Even after adjusting for inflation, costs of healthcare for seniors increased by about $2,000 per person over age 65 between 1996 and 2006, and Medicare paid a higher portion of the bill.

That's the finding from a new Agency for Healthcare Research and Quality report that analyzed per capita spending for prescription drugs, physician office visits, dental care, and hospitalization.

That $2,000 is an increase of about one-third. In 1996, for example, senior healthcare expenses were $6,989 per person, but grew to $9,080 in 2006. Of those four types of care, prescription drug purchases increased the most, 66%, from $105 to $174; while the cost of a physician's office visit increased 58%, from $114 to $180 per visit.

Because of Medicare Part D's implementation in 2006, Medicare paid a significantly greater portion of prescription drug expenses, taking the burden away from seniors' out-of-pocket expenses and private insurance.

The cost of a dental visit also rose significantly, from $187 to $254, while the price tag for a day as an inpatient in a hospital rose from $2,271 to $2,714.

Not all costs rose, however. The proportion of expenses attributed to home healthcare declined slightly, from 14.9% in 1996 to 6.6% in 2006.

Overall, senior healthcare expenses rose $100 billion in those 10 years, after adjusting for inflation, from $227.3 billion to $333.3 billion.