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Grappling with an Aging Population
ONC Editorial

May 29, 2023

This Policy Proposal discusses the growing aging population of the United States and its future implications. (The opinions expressed in this article are those of the individual author, whose information can be found below.)

Big Picture:

With advanced medical care and a larger aging population, the United States is growing older. In less than two decades, older adults are expected to outnumber children for the first time in the nation’s history. This will result in a decrease in the size of the workforce, greater demands for assisted living facilities and a strain on Social Security. These challenges must be addressed.

  • Graphic From: Vespa, J. (Mar 13, 2018). The graying of America: More older adults than kids by 2035. United States Census Bureau. This graph illustrates the growing population of the elderly in the United States from the years 1960 to 2060.

Operative Definitions: 

  1. Remote Patient Monitoring (RPM): Technology that transmits a patient’s medical information to professionals in real time.
  2. Digital therapeutics: Smartphone technology that assists patients by promoting healthy practices in their everyday life. 
  3. Earliest Eligibility Age (EEA):  The lowest age at which individuals can apply for Social Security benefits. Retirement benefits are reduced if they are claimed early. 
  4. Full Retirement Age (FRA): The age at which one becomes entitled to full retirement benefits, or to the full spouse’s or survivor benefit. 
  5. Phased retirement: A retirement plan in which one receives some of their pension benefits while working reduced hours. 
  6. 401K nondiscrimination testing: Annual tests conducted by the IRS to confirm that discrimination does not exist in dispersing retirement benefits. 
  7. Generic drugs: Drugs identical to previously-patented drugs but are allowed to be produced by multiple companies because of patent expiration. For a drug to become generic, its previous patent must be reviewed by the FDA. 

Important Facts & Statistics: 

  1. The U.S. Census Bureau predicts that the number of Americans 65 or older will double by the year 2060, totaling 23 percent of the U.S. population.
  2. U.S. Medicare expenditures are expected to increase to 11.8% of GDP, from 9.3% currently, by the year 2035, and further by 2060. 
  3. According to a report co-authored by the Center on Poverty and Social Policy and the National Women’s Law Center, female labor participation has dropped to 57% since the beginning of the COVID-19 pandemic, the lowest it has been since 1988. 
  4. It is estimated that access to affordable childcare would increase the number of women with young children working full-time by about 17%—and about 31% for women without a college degree.

5-Point Plan

(1) Improve funding and conditions for eldercare programs to meet the demand of an increased elderly population. Subsidize private healthcare firms, allowing them to receive modest funding benefits and enable increased wages to incentivise workers to enter the field. These subsidies must include a price ceiling so that the cost of healthcare does not become too much of a burden. The U.S. government should afford grants to programs that research innovative healthcare technology, including AI, digital therapeutics and RPM. These grants should be provided by the Administration on Aging and the Department of Health and Human Services, which may require the administration to be expanded. Expand social safety net programs to aid Americans in need of home and remote healthcare services. Though expenditures on these social programs already make up a majority of federal spending, this expansion will become necessary as the population ages.

(2) Raise the EEA by two years and the FRA by two months per birth year beginning with workers turning 62 in 2023, until the FRA reaches age 70 for workers born in 1978 or later, to decrease Social Security costs. Due to a longer life expectancy, a two year increase in the EEA would, by 2050, allow future beneficiaries of Social Security to spend the same number of years in retirement as people do now. Therefore, raising Social Security’s EEA is a viable way to decrease program costs as society prepares for an aging population. An increase in the FRA would reduce lifetime benefits for every affected Social Security recipient, regardless of the age at which a person claims benefits. Workers could maintain the same monthly benefit by claiming the benefits at a later age, though they would receive benefits for fewer years.

(3) Increase workforce size by increasing female labor force participation. In order to address workforce shortages, the U.S. government should incentivize women to participate in the labor force by investing in childcare as a public good. It is estimated that access to affordable childcare would increase the number of women with young children working full-time by about 17%—and about 31% for women without a college degree. Building a high quality, affordable childcare system would also increase women’s lifetime earnings, with the highest percentage increase among Black and Latina women. This would help strengthen women’s financial security for retirement, increasing their contributions to private savings and Social Security benefits. The Build Back Better framework announced by the Biden administration allocates $400 billion to early childhood education and childcare, including free universal preschool for all three- and four-year-olds for up to six years. The Build Back Better framework also allocates $200 billion to extend the enhanced child tax credit (CTC) that was included as part of the 2021 stimulus package for one year. This would include $3,000 per year for kids over the age of five, $3,600 per year for younger kids. In 2023, assuming the tax credit is not extended again, the amount would revert to $2,000 per year for all children.

(4) Push for a phased retirement. Phased retirement programs are not common in America, except in the education industry. Legislation that encourages other industries and private companies to offer phased retirement would allow for the aging population to remain in the workforce. Countries with formal phased retirement programs like Canada, Germany, the U.K. and Sweden have been able to maintain older workers and continue to provide full retirement pensions when they are ready to leave the workforce. Fear of failing 401K nondiscrimination tests makes employers hesitant to offer phased retirement. 401K nondiscrimination tests need to be updated to allow phased retirees to remain qualified for retirement benefits. 

(5) Expand healthcare to reduce overall service spending. The second largest source of savings comes through reduction of the cost of prescription drugs. Studies show that these costs could be reduced if the FDA had more employees to review applications for generic drugs, enabling reduced drug prices. The FDA’s Office of Generic Drugs has roughly 500 employees. This should be increased to 1,000 employees to increase the speed of generic drug approval. The government should fund interdisciplinary teams of care specialists, including occupational therapists, registered nurses and home-repair specialists to help elderly people in their homes. Studies find that this would reduce service spending by $29.1 billion annually.

Why This Initiative Is Important: 

Population aging presents unprecedented challenges. Addressing these challenges may require us to alter retirement programs, increase female participation in the workforce, reform our healthcare system and enact or revise many other policies, programs and practices. Fortunately, our technological and economic resources provide the resources necessary to adapt as a society.

Economic Impact (from our student economist team):

Expected net increase in federal government spending: $78.9 billion annually. Having more healthcare providers in the market will lower the costs of healthcare for all forms of care, including eldercare.

To see all sources consulted/reviewed/interviewed for the purposes of writing this article and/or to learn more about this article's author, click here.

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