By Ben Palmer, Staff Writer
The report found that millennials' spending habits are, by and large, similar to those of the generations before them. "We find little evidence that millennial households have tastes and preference for consumption that are lower than those of earlier generations, once the effects of age, income, and a wide range of demographic characteristics are taken into account," the authors said.
But there are important exceptions. Millennials spend more on housing than prior generations, and they're spending a lot more on education.
Those two trends may be linked: According to Lowell Ricketts, lead analyst for the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, the rise in student loan debt may be contributing to the decline in homeownership for millennials.
And then there's the other big outlier: Millennials spend much, much more on health care.
Based on the available data, the report found millennials spend nearly twice as much on health care as the previous two generations. In 2016, for instance, the typical millennial-led household devoted about 6.2% of its overall spending to health care. By comparison, when baby boomers were the same age, only 3.5% of their spending was devoted to health care.
So what's driving the increase? Above and beyond the nationwide increase in health care costs over time, a contributing factor appears to be the Affordable Care Act, which requires most people, including millennials, to purchase health insurance.
Due to the ACA's requirements, more millennials are insured—and paying for their insurance out-of-pocket—than was the case for prior generations at the same age. (It's worth noting that the Federal Reserve's data on health care spending did not include costs for employer-based health insurance.)
And further research shows that millennials aren't just spending more money on health care than their predecessors—they also have distinctive preferences for the care they receive.
Across the last few years, Advisory Board has surveyed thousands of consumers across the United States to better understand how care expectations vary by age.
Among the key takeaways:
So while millennials' spending habits may not be drastically different from previous generations, they do have distinctive demands for their health care providers. They're socially connected, they're cost-conscious, and they want to fit care into their busy lives, whether through nontraditional hours or through telemedicine.
Millennials are now the largest living generation—which means they're poised to become the backbone of your workforce and top utilizers of everything from primary care to maternity services to virtual visits. To help you understand this generation, we've collected some of our best resources on millennials.
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