AUSTRALIA may have to tax the retirement wealth of babyboomers or encourage medical savings accounts to pay for the cost blowout of healthcare by 2050.
THE Actuaries Institute is calling for drastic action to fix the sustainability of the health system, saying the working population could be forced to pay double their own health costs to subsidise older Australians.
The institute says that by 2050 seven out of every 100 people would be 85-years-old – compared to just three in every 100 now. Their healthcare costs are four times that of someone who is 50-years-old, the report “Who will fund our Health?” says. Apart from suggesting people be encouraged to work longer, the institute says Australia may have to tap into the wealth of retirees to pay for their healthcare. An increasing amount of wealth was being concentrated in the hands of babyboomers, it says. “This fact leads to the question – does it make sense, and is it equitable, to ask this cohort to pay more to help fund future health costs?,” the report asks. Other solutions include Medical Savings Accounts to encourage people to save towards their healthcare in old age. They could either be voluntary or compulsory, and even linked to superannuation contributions, the institute says.