In fact, 42 percent of people who live to the age of seventy will spend time in a nursing home before they die ( Murtaugh et al. Most elderly who live beyond 75 or 85 years of age become frail at some point and need some form of assistance, making lifetime risks much higher. These statistics measure the number of elderly who are disabled at any given point in time. **ADLs include problems with eating, bathing, dressing, toileting, transfers, and continence. In most other countries, these items tend to be financed socially. It should be noted that because of the United States’ approach to financing these services, aging shocks represent burdens borne by individuals more than society. By contrast, the present value of lifetime out-of-pocket prescription drugs costs averages $12,000, uncovered medical care comes to $16,000, and uncovered private insurance premiums come to $18,000 1 ( Table 1). The typical 65-year-old faces present value lifetime costs for uncovered long-term care of $44,000.
If the lifetime costs of each of these “aging shocks” are calculated, the long-term care burden is the worst by far. However, we focus principally on the implications of long-term care services, which along with prescription drugs, have had the fastest growing costs in the list cited.Įvery elder has to prepare for four key “aging shocks”: uncovered costs of prescription drugs, the costs of medical care that are not paid by Medicare or private insurance, the actual costs of private insurance that partially fills in the gaps left by Medicare, and the uncovered costs of long-term care. Much of the logic of the paper applies to each of these financial resource challenges. Various aspects of economic burden are associated with an aging population: social security payments will increase, medical care insurance costs will grow, the burden associated with uncovered medical expenses such as pharmaceuticals will become quite serious, and long-term care costs will grow. The economic challengesdiscussed are such that public and private progress that begins in the near future will make the future burden substantially easier to handle. Public policy goals related to an aging society must balance the need to provide adequate services and transfers with an interest in maintaining the economic and social well-being of the nonelderly.
The discussion has significant implications for public policy and for private actors focused on developing an effective care system for the mid–twenty-first century. What type of economic burden might be considered overwhelming? Existing literature never explicitly defines this but the sense is that the burden might be considered overwhelming if: (a) tax rates need to be raised dramatically, (b) economic growth is retarded due to high service costs that preclude other social investments, or (c) the general well-being of future generations of workers is worse than that of current workers due to service costs and income transfers. These challenges are significant but different from macro cost issues. Finally, the paper presents four key challenges that represent the real economic burden of long-term care in the twenty-first century. Then, a new analysis of burden is presented to suggest that aggregate resources should not be a major issue for the midcentury economy.
The first half of the paper reviews the literature and logic that suggest that aging in general, and long-term care services in particular, will represent an overwhelming economic burden on society by 2030. This paper assesses the economic dimensions of the 2030 problem. In addition to the Baby Boomers, those born prior to 1946-the “oldest old”-will number 9million people in 2030. Much of this growth will be prompted by the aging of the Baby Boomers, who in 2030 will be aged 66 to 84-the “young old”-and will number 61 million people. The “2030 problem” involves the challenge of assuring that sufficient resources and an effective service system are available in thirty years, when the elderly population is twice what it is today. A major public policy concern in the long-term care field is the potential burden an aging society will place on the care-giving system and public finances.
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