Report Reveals Out-of-Pocket Cost of Health Care in Last 5 Years of Life

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Updated July 2025

The Journal of General Internal Medicine published a report in 2012 that looked at data from more than 3,000 people covered by Medicare to gauge the impact of health care cost on seniors. Researchers measured how much Medicare-eligible seniors had spent out of pocket on healthcare in their last five years alive, and looked at how those costs weighed on their total household income.

After crunching the numbers, the report found that during that time period, more than 75 percent of Medicare-eligible households spent at least $10,000 out of pocket on health care. Spending for all participants during those last five years averaged $38,688, and for the remaining 25 percent the average expense was even greater: they spent $10,791 out of pocket! The report’s researchers noted that expenses varied based on the type of illness participants faced, with dementia costing the most money (double the cost of cancer or gastrointestinal diseases).

A study on the nation’s health released in 2016 by the Centers for Disease Control and Prevention found that between 2003 and 2013, total personal healthcare expenditures grew from $1.5 trillion to $2.5 trillion. During this decade, the average annual growth in Medicare expenditures was 7.2%, for Medicaid (federal) it was 4.7%, for Medicaid (state) 5.7%, for private health insurance 4.8%, and for out-of-pocket spending 3.6%. And while this rise in health care costs is significant, it pales in comparison to the challenges of paying for health care needs as the boomers age.

Healthcare Costs Continue to Rise

Healthcare spending by Medicare recipients increased by 53% between 2013 and 2022, although healthcare spending as a share of total household spending remained about the same over that time span, representing 13.6% of the household budget. Most seniors will not be surprised that data from 2022 confirms that out-of-pocket healthcare costs continue to be significant. Most seniors pay more for supplemental insurance (offered in Medicare Advantage or Medigap policies) than they pay for Original Medicare, yet they still pay more than $2,000 per year for medical services, drugs, and medical supplies that aren’t covered by insurance.

Those expenses only rise as seniors grow older. In the last year of life, average out-of-pocket expenses approach $10,000. Those expenses can be higher, however, depending on the disease that causes the senior’s life to end. People who die from dementia have substantially larger out-of-pocket expenditures in their last five years of life than those who die from other causes.

Needless Healthcare Expenditures

According to the Journal of the American Medical Association, the baby boomer generation is actually sicker than their parents’ generation as illustrated in these numbers:

  • Almost 40 percent of boomers are obese, compared with 29 percent a generation ago
  • 52 percent said they got no regular physical activity versus 17 percent of their parents
  • One in five has diabetes
  • 40% are obese
  • 51% have hypertension in 2009 to 2012
  • 45% take a prescription cardiovascular drug
  • nearly one third (32%) take a cholesterol-lowering drug
  • 14% use a prescription antidepressant

According to a study by the Center for Studying Health System Change (HSC), of the $2.3 trillion that Americans spent on health care in 2007, somewhere between $500 billion and $700 billion was spent on tests, treatments and hospital stays that did nothing to improve our health. Some of the reasons cited for this trend include:

  • Quantity over Quality—doctors are rewarded for the number of patients they see and the number of treatments they prescribe, rather than the quality of care they provide.
  • The Costs of Medical Malpractice—health care providers are practicing “defensive medicine” to protect themselves against legal actions by ordering more procedures.
  • Consumer Choice—too many people see doctors when they’re not ill and nearly half of all emergency room visits are for medical care that could have been received during a regular doctor appointment.

(This article was updated July 2025 since it originally published October 2015.)