The Future of Aging Services in a Neoliberal Political Economy

By Estes, Carroll L. | Generations, Summer 2014 | Go to article overview

The Future of Aging Services in a Neoliberal Political Economy


Estes, Carroll L., Generations


We need to get back to the basic priorities of economic and health security, as well as food, housing, and functional security for all elders.

ublic policy has created an "aging enterprise," which assures that the needs of older adults will be processed and treated as a commodity (e.g., medical services) and sold for a profit.

The aging enterprise is composed of "the programs, organizations, bureaucracies, interest groups, trade associations, providers, and pro- fessionals that serve elders in one capacity or another. Major components include physi- cians, hospitals, the Social Security Administra- tion, the Administration on Aging, state and area agencies on aging, congressional committees on aging, and the nursing home and insurance industries" (Estes, 1979).

The primary beneficiary of this enterprise is the medical industrial complex, which com- prises the most well-funded part of the aging enterprise. The medical industrial complex operates largely in the private (increasingly proprietary) sector, and is heavily subsidized by the federal government through Medicare, Medicaid, and Affordable Care Act (ACA) policy and financing (Estes, 1979, 1986, and 1992; Estes and Associates, 2001).

Old age, aging, and the policies designed to "treat" this stage of life are shaped by four social processes of consequence to our society: the bio-medicalization of aging; the commodifica- tion of aging; the privatization of old-age policy; and, the rationalization of old-age policy (Estes, 1991). These policies and services for older people are embedded in and reflective of larger trends in American life and society. Market ideologies and an ongoing shift to individual responsibility have accelerated and increased public costs through privatization and health and human services profits (Estes, 1991).

The mini-history of this state of affairs begins with the 1965 passage of Medicare and Medicaid, and the well-documented govern- ment subsidies for the largely private (and lucrative) "American health empire" (Ehren- reich and Ehrenreich, 1970). Today, medical care accounts for 18 percent of the U.S. econo- my. Federal subsidies include, but are not limited to, substantial tax deductions for employer health insurance, hospital and nursing home construction, health workforce (mainly Medicare physicians) training, research (e.g., National Institutes of Health), and tax exemptions for nonprofits. The latest data for 2007 show that the largest tax subsidy for private health insurance-the federal exclusion from income and payroll taxes of employer and employee contributions for employer-spon- sored health insurance-is estimated at $200 billion in lost revenues (Kaiser Family Founda- tion [KFF], 2008).

The Joint Committee on Taxation (2008) reports an even higher amount: $143 billion lost in federal income tax and $100 billion for FICA taxes as tax expenditures for the employer coverage tax exclusion.

In 2003, legislation continued and expanded government funding for proprietary healthcare (e.g., the pharmaceutical industry's Medicare Part D bill) that prohibits Medicare from negoti- ating drug prices and excludes Medicare from participating in or competing with private drug management companies, and forbids drug dis- counts to those eligible for both Medicare and Medicaid (dual eligibles), while giving bonus subsidies to private Medicare Advantage plans. The 2010 ACA both reduced and added differ- ent and new government subsidies for mostly private (and largely for-profit) Medicare services. Although the ACA cut or reduced some govern- ment subsidies (e.g., managed care and provider payments), industry lobbying has scaled back or delayed many such cost-saving provisions.

Lagging behind the medical care behemoth are community-based social and supportive services that had their federal boost with the 1965 Older Americans Act (OAA), creating what is known as "the aging network." Under the 1973 Comprehensive Services Amendments of the OAA, state units on aging and area agencies on aging (AAA) were established (Estes, 1979). …

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