Why You Need to Save for Retirement: Joint Replacements Cost More Than Annual Income in 18 States

Health, Medical Costs
Why You Need to Save for Retirement: Joint Replacements Cost More Than Annual Income in 18 States

Joint Replacements Cost More Than Annual Income in 18 States

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Knee and hip replacement surgeries are becoming more common among aging Americans, with more than 7 million currently living with these artificial joints. That number is on the rise, with knee replacements increasing at a rate of 8% each year and having doubled in the last decade. But with fewer Americans saving for retirement and the costs of such surgeries climbing to far above the average annual income in 18 states, many are likely to be left with bills they simply can’t pay.

The cost of knee and hip replacement surgeries vary widely, but in 18 states – the majority of which are in the southern half of the country – those costs are far above the median annual household income. The average price across the country for such a procedure is $50,105. Monterey Park Hospital near Los Angeles charges the most ($223,373), while Chickasaw National Medical Center in Ada, Okla., charges only $5,303. For many of the millions of patients who will likely need the procedures in coming years, neither price is manageable.

Between 2000 and 2009, the number of hip and knee replacements jumped by more than 25%, according to the Organisation for Economic Cooperation and Development. At an annual growth rate of 8%, one in 12 adults over the age of 25 will one day have this surgery.

Increased knee and hip replacements paired with higher medical costs

The N.Y. Times recently reported on a 67-year old photographer who flew to Brussels for his hip replacement, where it cost him $13,660 compared with the estimated $65,000 at his U.S. hospital. Higher than average medical costs are not new for the U.S.; compared to other developed nations, medical spending in the U.S. is more than 60% higher, according to Aetna, and there are several factors to blame. Hospital costs make up just over 30% of total U.S. health care spending, followed by spending on physicians at 20%. Overall, health care expenditures rose 4% in 2012 and 4.1% in 2011, and out-of-pocket spending rose nearly 5% in 2012, according to the Health Care Cost Institute.

Another significant contributing factor to rising hospital costs is the growing consolidation of the hospital industry, where mergers and acquisitions grew 33% from 2009 to 2010 alone. In addition, doctors are charging more, accounting for nearly 20% of increasing health care costs over a five-year period. Improving medical technology, an aging population and unhealthy people are further driving costs up.

Retirement savings down as Americans struggle to pay medical bills

As medical costs climb, more than one-third (36%) of U.S. workers have less than $1,000 saved for retirement, according to a telephone survey from the Employee Benefit Research Institute and Greenwald and Associates. More than half (60%) have less than $25,000 put away. Experts have said we are standing on the precipice of a “retirement crisis” that will be faced in the next 20 years.

In 2013, NerdWallet estimated that some 56 million Americans under the age of 65 would struggle with their medical bills and more than 15 million would use all of their savings to cover such costs. Some would argue that the Affordable Care Act should make the problems of managing medical debt and unexpected costs easier, but as Christina LaMontagne, VP of Health at NerdWallet said, “Insurance is no silver bullet. Even with insurance coverage, we expect 10 million Americans will face bills they are unable to pay.”

For retirees, the costs associated with a prosthetic knee or hip can wipe out savings—even if they do have health insurance.

Fidelity estimates couples who retired in 2013 would need $220,000 to cover medical expenses through the end of life. A hip or knee replacement for the uninsured could account for one-quarter of these costs. While insured individuals will likely pay much less for a procedure, insurance certainly doesn’t make costly procedures free.

For many, finding a way to save for retirement is a challenge when paying the bills leaves you with little left. But whether you are making upwards of $200,000 or less than $50,000, there are ways to plan for the future—beginning with acknowledging the need for retirement savings, including medical expenses, and the willingness to make sacrifices for your future.

The cost of joint replacements as compared to median income

State Average cost of hip replacement Median income Hip replacement more or less than median income?
Alabama $52,057 $41,574 More
Alaska $59,078 $67,712 Less
Arizona $54,977 $47,826 More
Arkansas $39,338 $40,112 Less
California $86,473 $58,328 More
Colorado $60,183 $56,765 More
Connecticut $40,544 $67,276 Less
Delaware $37,724 $58,415 Less
Florida $66,179 $45,040 More
Georgia $48,578 $47,209 More
Hawaii $41,059 $66,259 Less
Idaho $37,716 $45,489 Less
Illinois $54,560 $55,137 Less
Indiana $48,301 $46,974 More
Iowa $37,200 $50,957 Less
Kansas $41,490 $50,241 Less
Kentucky $40,578 $41,724 Less
Louisiana $51,941 $42,944 More
Maine $35,365 $46,709 Less
Maryland $23,209 $71,122 Less
Massachusetts $33,523 $65,339 Less
Michigan $35,015 $46,859 Less
Minnesota $37,434 $58,906 Less
Mississippi $53,681 $37,095 More
Missouri $45,697 $45,321 More
Montana $31,781 $45,076 Less
Nebraska $44,429 $50,723 Less
Nevada $75,748 $49,760 More
New Hampshire $48,651 $63,280 Less
New Jersey $78,352 $69,667 More
New Mexico $52,818 $42,558 More
New York $40,509 $56,448 Less
North Carolina $42,728 $45,150 Less
North Dakota $32,255 $53,585 Less
Ohio $42,273 $46,829 Less
Oklahoma $47,896 $44,312 More
Oregon $40,594 $49,161 Less
Pennsylvania $52,160 $51,230 More
Rhode Island $34,786 $54,554 Less
South Carolina $57,136 $43,107 More
South Dakota $38,030 $48,362 Less
Tennessee $51,041 $42,764 More
Texas $61,947 $50,740 More
Utah $38,426 $57,049 Less
Vermont $32,693 $52,977 Less
Virginia $48,265 $61,741 Less
Washington $52,780 $57,573 Less
West Virginia $33,581 $40,196 Less
Wisconsin $38,827 $51,059 Less
Wyoming $48,964 $54,901 Less

Source: Medicare Inpatient Charge Data and U.S. Census.


Medicare Inpatient Charge Data used to determine average cost of joint replacement by state. Median income data from 2012 American Community Survey 1-Year Estimates from the U.S. Census.

Orthopedics consultation photo courtesy of Shutterstock.

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