As health care costs continue to increase, a survey suggests growing numbers of Americans worry about just how high those costs will get. 

Allstate Insurance surveyed 1,400 people, between the ages of 42 and 56 for its annual “Retirement Reality Check” survey.

The poll found 67 percent of those responding cite rising health care costs as their top fear about retirement.  That’s up from 39 percent in the 2001 survey.

The 2002 survey also found Americans increasingly worry about failing health, and its impact on their finances as they age.

While only 27 percent of those responding to Allstate’s 2001 poll expressed concerns about failing health, nearly half of those taking part in the 2002 survey worry failing health will put severe financial strains on their retirement.

“Health care costs are going nowhere but up, and it looks as if that trend will continue,” says Peggy Dyer, senior vice president of strategy and marketing at Allstate Financial.

With employers trying to limit increases in what they pay for employee health coverage, many Americans are footing a heavier bill for health care.  A study by Hewitt Associates found employees are paying increasing amounts for prescription drugs and specialty-care office visits.  Hewitt also found the average HMO premium rose 15.3 percent in 2002.

“Those approaching retirement can't sit back and wait for the government to take action.  People must plan ahead for health care costs so that they're not caught unprepared," Dyer says.

A call to action

The American Association for Retired Persons (AARP) thinks the government should take action, now.  John Rother, director of strategy and planning for AARP, says a study by the organization found baby boomers will not put as much of an added burden on the health care system in their retirement years as earlier predicted.

Rother says current trends indicate there will be no age-driven tidal wave of demand for long-term supportive services for at least two decades. "Of course, these trends are playing out differently across the states," Rother admits. "Florida, for example, has already experienced a demographic wave that illustrates the need for timely changes in state programs."

Rother says the federal and state governments could greatly reduce the impact of rising health care costs on baby boomers as they reach retirement age, if government acts now to reform long-term health care programs and regulations.

"State and federal policymakers should seize the rare opportunity afforded by positive demographic, socioeconomic, and health trends to make essential changes in the nation's long term care programs," Rother says. "Current favorable trends present a window of opportunity for the public and private sectors to work together to create a new vision for long-term supportive services in this country."

“If the issues of the growing and aging population's future long term care needs, are not addressed today, the choices will be limited to the wealthy and highly educated,” Rother warns. “Access to choices for the population at large will be restricted to those who can afford alternatives to nursing homes such as assisted living or home and community based services. Any changes must extend the benefits of improved health and increased choice to those who have been left out thus far," Rother says.