Report Data Suggest

ELDERLY COULD AFFORD UNRATIONED CARE

By Dept. of Medical Ethics

A recent report by the National Academy on an Aging Society contains statistics strongly suggesting that even after the retirement of the baby boom generation, both America as a society and most older people as individuals should be able to afford unrationed health insurance.

The January 1999 report, entitled "Demography Is Not Destiny," comes to this conclusion because its research goes beyond the usual analysis which depends heavily on the fact that, proportionately, there will be fewer workers available to pay taxes to cover the costs of Medicare benefits for retired people when the baby boom generation begins to retire.

For example, the report points out that in addition to changes in the proportions of older and working age populations, the effects of economic growth and personal assets available to baby boomers must be taken into account.

Increased Benefit Costs

It is true that there will be a significant increase in the proportion of older people drawing Medicare benefits as compared to working-age people paying the taxes that cover the cost of those benefits. For instance, while in 2000 there will be 21.4 Americans 65 and older for every 100 Americans aged 20 to 64, by 2040 that will rise to 36.9 for every 100.

It seems a simple equation that such a smaller proportion of people paying Medicare taxes means either that taxes would have to be substantially increased or the amount government pays per beneficiary would have to be substantially reduced. The effect of the latter would be to force rationing, including involuntary denial of lifesaving medical treatment. But as the report indicates, there are other factors at work.

Reasonable Expectations for Sufficient Economic Growth

The Congressional Budget Office projects that as a result of the coming retirement of baby boomers, government expenditures for Social Security and Medicare would have to rise almost 167%, after adjusting for inflation, from1998 to 2030 to maintain the same level of benefits per person as today.

For real national income to increase 167%, economic growth after inflation would have to average 1.6% over the intervening 32 years.

Is this realistic? The report points out that over the past 32 years, such economic growth has in fact averaged 2.9%.

Who Can Afford?

The National Academy on an Aging Society report also sheds light on a central point of contention between the Clinton-Gore Administration and the pro-life movement.

In 1997, over the opposition of the Administration, the pro-life movement succeeded in winning the right for older Americans to add their own money, above the annual government contribution, in order to obtain unrationed, unmanaged "private fee-for-service" health insurance under the "Medicare+Choice" program. The Clinton-Gore Administration has consistently opposed this right, arguing that only the wealthiest will be able to afford it.

However, data contained in the academy report support the view that a much larger proportion of older Americans should be in a financial position to pay what is necessary to obtain unrationed health insurance. Even after taking inflation into account, the financial well being of older Americans has been increasing dramatically.

In 1960 over one-third of the elderly had incomes below the poverty line; today, that is true of only about a tenth. In 1996 dollars, the median income of older people in 1962 was a little over $8,000; by 1996 it had doubled to about $16,000. It is likely that these upward trends in income will continue.

Sources for the money needed by older people to get unrationed health insurance can come not only from then-current income, but also from savings toward retirement. The report demonstrates that today's baby boomers have more assets saved than their parents (by and large, those currently retired) did at the same age, after adjusting for inflation. In 1989 dollars, those aged 35 to 44 had a median wealth of $54,200 in 1989; by contrast, those aged 35 to 44 in 1959 had a median wealth of only $29,300.

The report did warn against complacency, especially because there are significant disparities in income and wealth across the broad population. In 1997, 40% of the elderly had incomes less than 200% of the poverty level. Still, this figure had fallen from about 50% in 1975.

"While the impending retirement of the baby boom generation will create difficult challenges, the National Academy study provides convincing evidence that no claim of dire necessity can justify condemning the ill elderly to death by rationing," said Burke Balch, J.D., director of NRLC's Department of Medical Ethics. "For the government now to prohibit older people from even using their own money to save their lives would be a terrible and tragic mistake."

From "Demography Is Not Destiny"
"What the media do not say is that planning for the future on the basis of demographic projections alone is a fool's game. Demographic predictions are not necessarily 'right.' Nor is demography the only major factor at work. Many other factors can be equally important. What is needed for wise policy planing is a close look at the whole range of influences on our future."