Academic journal article Generations

The Seven Most Important Demographic Events That Will Influence Medicare in the Future

Academic journal article Generations

The Seven Most Important Demographic Events That Will Influence Medicare in the Future

Article excerpt

When Congress signed Medicare into law in 1965, the life expectancy of the U.S. population was 70.2 years, the probability of a baby born in 1965 reaching age 65 was 71.3 percent, and among those who had already celebrated their sixty-fifth birthday in the year Medicare was enacted, 28.1 percent would survive to their eighty-fifth birthday. A century ago, Americans lived only about forty-seven years, and the probability of a baby born in that year reaching age 65 was only 39 percent (Bell and Miller, 2005). On the surface, these statistics are accurate-many Americans are living much longer and healthier lives than at any time in our history, and, for some, there is reason to be optimistic about the future (Olshansky et al., 2009).

However, the picture that these and other related statistics convey is only part of the story of our past and present. There is a unique "history" behind mortality and survival statistics that provides a full three-dimensional view of the forces that influenced past and current health and longevity attributes of the U.S. population ages 65 and over, and the factors most likely to influence cohorts reaching these ages in the future. The following seven major demographic events will influence attributes of the Medicare population in the future.

Event Number 1

Demography Is Destiny. The number of people surviving into the Medicare age window has risen steadily since 1965, and it will inevitably continue to do so for the next twenty-five years as a result of shifting demographics, and due to declining mortality at middle and older ages. This population's size will increase by at least 67 percent between now and 2040.

In 1965, the U.S. population was at 194 million. Having risen to 316 million by 2015, the U.S. Census Bureau projects it will rise to 380 million by 2040. The U.S. population was increasing at a rate of 2.4 million per year during the period of 1965-2015, but it is projected to experience an accelerated rate of increase to 2.56 million annually between now and 2040. The largest percentage increases will be in the population ages 65 and older.

The U.S. population also experienced a dramatic demographic shiftsince the beginning of the twentieth century. Our age structure used to be in the shape of a pyramid, with few people reaching older ages; it now has become rectilin- ear. By way of illustration, in 1900, the proportion of the U.S. population age 65-plus was 4.1 percent, but this has risen to 14.8 percent today, and will rise to 21 percent by 2040 (Administration on Aging, 2014). The absolute increase in the number of people ages 65-plus and 85-plus also will rise dramatically over the next quarter century (U.S. Census Bureau, 2013). From 2015 to 2040, the age structure of the United States will transform to the permanent shape of a square (or nearly so), with at least as many people alive at older ages as there are at younger ages (see Figures 1 and 2 on page 150). As a result, there will be large and rapid increases in the Medicare-eligible population, at least through mid-century.

Event Number 2

Radical Life Extension Is Highly Unlikely. The probability of surviving to the Medicare age window is unlikely to change much in the coming decades, nor is there likely to be a dramatic improvement in survival to later ages once having reached the age of 65. The former cannot occur because nearly everyone already born sur- vives to age 65, and the latter is unlikely because of the accumulation of lethal risk factors as a function of age.

In 1965, about 71 percent of babies born in that year were expected to reach the Medicareeligible age of 65 and, by 2015, this rose to more than 84 percent (see Table 1, below). This increase was a byproduct of large reductions in death rates at younger and middle ages. By 2040, survival to age 65 is expected to rise marginally to 87.5 percent, which means the rate of improvement in survival will decelerate rapidly in the coming decades. …

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