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Informing Policy in Health, Economics & Well-Being
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The Baby Boomers Will Shift the Health Status of the Medicare Population

A Typical Medicare Recipient in 2030

A new study by Schaeffer Center researchers Etienne Gaudette, Bryan Tysinger, and Dana Goldman predicts significant changes in the average future Medicare recipient. By 2030, the typical elderly beneficiary will be female, slightly younger, more educated and more likely to have never smoked according to the study findings. But, the average recipient will more likely be obese, disabled, and have more chronic conditions.  The video below outlines their major findings.

These changes in health status, coupled with increased life expectancy and a larger population aged 65 and older set the stage for significant changes to the overall Medicare program.

What These Changes Mean for Medicare Spending

The researchers predict that spending per beneficiary is expected to grow for all elderly age groups. At age 65, a typical beneficiary in 2010 was estimated to have a total lifetime Medicare spending worth $131,000. Because of the rising life expectancy, higher prevalence of chronic conditions, and increasing medical costs, total lifetime Medicare spending for a typical 65-year-old beneficiary will increase 72 percent to $223,000 by 2030. Considering the overall program, Medicare spending in constant dollars is expected to more than double, from $510 billion to $1.2 trillion by 2030.

This spending increase will not be uniform across all beneficiaries notes Gaudette and his colleagues. While all Americans are collectively living longer, life expectancy gains are highest for people at the top of the income distribution. This gap in life expectancy is growing, adding to the decreased progressivity of Medicare- or the degree to which lower income people bear more or less of the burden of financing Medicare compared to the benefits they receive from the program (a recent National Academy of Sciences report co-authored by Goldman expands on this finding).

Risks and Policy Implications

The implications for a particular disease-specific breakthrough for both population health and Medicare spending would be relatively modest but a shift in medical innovation towards delayed-aging breakthroughs would lead to tremendous gains in healthy lifespans predict the researchers.

“Our results highlight the substantial risks facing Medicare. Among the risks, the size of the elderly population in the future likely will have the highest impact on spending but is easiest to forecast. Population health and the proportion of the future elderly with disabilities are more uncertain. For these risks, tools such as the Future Elderly Model can provide reasonable forecasts to guide policymakers. Finally, medical technology breakthroughs and their effect on longevity are most uncertain and perhaps riskiest,” said Gaudette, who is a research assistant professor at the USC School of Pharmacy and director of policy at the USC Roybal Center for Health Policy Simulation.

While the authors contend that investing in research to delay aging should become a priority, they warn that the longevity gains these efforts may produce would also mean extraordinary increases in Medicare outlays.

“Policymakers will need to keep these risks in mind if we are to sustain Medicare for another 50 years,” noted Gaudette.

The researchers used the Future Elderly Model, an economic- demographic simulation tool, to predict what the average beneficiary will look like to predict the impact on Medicare spending in the future. The Future Elderly Model (FEM) follows Americans aged 51 years and older and projects their health and medical spending over time using data from the Health and Retirement Study, The National Health Interview Survey, the Medical Expenditure Panel Survey, and the Medicare Current Beneficiary Survey.