AGING POPULATION: Can Medicare Stay Solvent?
A new report from the National Academy on an Aging Society calls into question the prevailing opinion that a generation of aging boomers will precipitate a Social Security and Medicare crisis. While the authors concede that the aging population will present a challenge, they assert that public policies to enhance economic growth, influence individual savings behavior and redistribute income will avert a crisis. The authors look to past growth in aging populations to bolster their predictions.
'A Fool's Game'
Although the aging population is expected to double over the next 35 years, it has already doubled since 1960 "without devastating consequences." Calling future plans based on demographic projections alone "a fool's game," authors Robert Friedland and Laura Summer note that the Census Bureau has projected "a whole range of projections about the size of the U.S. population in 2040, the lowest and highest of which differ by 170 million people." Projections of the size of the elderly population in 2030 who will need long term care also range widely, from 10.8 million to nearly 14 million.
Long Term Care Needs
Although long term care needs are expected to strain seniors financially, there is "enormous uncertainly related to making predictions about the need for long term and the cost of care." The authors point to Alzheimer's, noting that the cost of care for those with the disease could climb from its current level of $100 billion to $350 billion by 2050. However, should researchers develop a cure for the disease, long term care costs could be significantly reduced. Further, older Americans today are healthier, wealthier and better educated than are seniors of older generations. As a result, the authors note, policy changes to Medicare and Social Security should reflect the likelihood that the trend will continue -- tomorrow's elderly population is poised to live longer, work harder and stay healthier (Friedland/Summer, "Demography Is Not Destiny, Jan. 1999).
Speaking at a recent conference to introduce the report, Judith Feder, dean of policy studies at Georgetown University, noted that nursing home residents allocate on average 30% to 40% of out-of-pocket expenses for nursing home care. Feder predicts that nursing home residents and their families will continue to foot much of the bill for nursing care. Indeed, the study found that barring policy provisions, out-of-pocket expenses for nursing home residents will climb to 48% by 2030. Feder advocates using policy leverage to address such concerns, saying, "Just as we have coped with an elderly population that has doubled since the 1960s, we will cope in the future." She calls for a shift in the focus of debates from efforts to limit public spending to broader questions of likely needs and availability of resources as the population ages. Marilyn Moon of the Urban Institute agreed, noting that as people adjust to the reality of an aging population, long term policy changes will be valued over short term goals. Feder notes that the aging population will spur debates over who should shoulder the financial burdens, but she adds that as the population receiving Medicare benefits grows, it will be "appropriate" for their to be a greater draw on both private and public funds (Allison Morgan, California Healthline).