When America reaches its 250th anniversary in 2026, Millennials — those born between 1981 and 1997 — will represent the largest and most influential adult generational cohort in America, with a profound opportunity to realign the nation’s priorities as they enter their prime years and influence the shape of the future health care landscape.
Millennials are already leading the charge to a healthier America. In contrast to prior generations, they are largely healthier. Studies confirm that Millennials are more active than their elders and their diet is healthier. They smoke less than previous generations, and they have, on average, fewer sexual partners than baby boomers and Gen Xers. Even their conception of health is different: Millennials are more likely than previous generations to define “healthy” as “eating right and exercising,” as opposed to “not falling sick.” Millennials, however, are also less wealthy than previous generations and are the first generation in memory that is likely to be less affluent than their parents and grandparents. Data indicates, for example, that in 2016 more Millennial households live in poverty than any other cohort, representing 5.3 million of the 17 million total U.S. households living in poverty. Census Bureau data indicates that the median earnings of 18- to 34-year-olds in 2009 to 2013 were lower than the earnings of 18- to 34-year-olds (baby boomers) in 1980. And other indicators such as wage growth and home ownership lag as well. So, while Millennials are keenly interested in health and aspire to a healthy lifestyle, they currently have fewer resources to invest in their health.
By comparison, baby boomers — those adults born between 1946 and 1964 — have a 55% higher prevalence of diabetes and a 25% higher prevalence of obesity than previous generations at the same age. Furthermore, there is increased incidence of dementia, Alzheimer’s disease, and various types of age-related cancer that are all extremely costly to treat and require long-term specialized care. But, while boomers’ health is relatively poor, they are overall entering retirement in strong financial condition, with the median boomer possessing about $253,000 in assets. This cohort holds perhaps as much as 70% of total U.S. disposable income.
The United States’ health care system, then, not only faces the enormous needs of the elderly baby boomer population in the short term, but also confronts the possibility of a massive shift in the long term. Millennials will define America’s future for decades to come, and the significant large-scale implications of this demographic change for the health sector are wide ranging, which raises our central question: With a legacy health care system that is largely structured to accommodate the needs of an aging society and age-driven diseases, how will the health industry evolve to address the different needs raised by aging baby boomers and prime-adult-year Millennials, when boomers are wealthier but less healthy and Millennials are healthier but less wealthy?
Certainly the changing health and wealth profiles of America’s two largest generational groups have mixed implications for life science manufacturers, pharmacies, payers and providers. The aging and unhealthy baby boomer population presents, on net, a significant boon for hospitals, pharmaceutical companies, medical device manufacturers and retail pharmacies. The number of new cancer cases among men, for instance, is expected to rise to 1 million by 2020, up 24% from 2010. Given their disposable income, boomers are expected to significantly reorient to greater health spending in coming years, possibly bucking the long-standing U.S. consumer trend of less spending with age. At the same time, rising boomer health care spending will strain Medicare and private insurance by creating more unhealthy patient pools.
By contrast, Millennials’ health and wealth trends threaten to cut into the profits of traditional pharmaceutical companies, medical device manufacturers and hospitals, while largely sparing insurers and boosting retail pharmacies. Millennials’ precarious financial conditions will likely encourage them to continue to forgo needed care and prescriptions, while their broader focus on wellness may lead them to become healthier, thus further decreasing their health spending. This increased focus on health, and decreased health spending, is promising for insurers looking to balance out the growing cost of boomers. Furthermore, given that Millennials are uniquely financially disadvantaged among U.S. generations, their personal circumstances and political outlook may make them more likely to look increasingly to government as a health payer. Recent polling by the Pew Research Center finds, for instance, that 45% of those between the ages of 18 and 29 support a national single-payer health care system. The extent to which Millennials will use their political heft to increase the government’s role in health care payment remains to be seen.
In the coming years, we expect the Millennial generation will continue to push the health care industry to innovate, adapt and evolve. Millennial preferences and habits are inspiring change across generations, and they are serving as leaders for the rest of U.S. society as expectations for greater information, convenience, transparency and connectivity are disrupting every industry. Health care, in spite of its regulatory challenges, will be no different.
Per Hong is a partner at A.T. Kearney. He can be contacted at email@example.com.