A Healthier Old Age
Table of Contents
It is true that older people spend more time, energy, and money on their health as they age. But that does not mean they are by and large unhealthy. In fact, considerable evidence suggests that the prevalence of disability and the need for long-term care for older people may be significantly less than previously projected. While some observers fear that longer lives will result in runaway Medicare costs, gains in longevity may have less impact on Medicare's budget than many expect. A substantial share of Medicare's budget (28 percent) each year pays for costs in the last year of life, especially in the last two months of life, a percentage that has remained steady over many years. According to recent research, past age 70 or 75, each additional year lived, on average, adds little to Medicare costs.16
Considerable evidence also suggests that the prevalence of disability among older Americans is declining17 and at an accelerating pace.18 A caveat to this generalization is that the decline in the prevalence of disability is occurring primarily among people with lower levels of disability. Even with this caveat, the lower prevalence of disability in later life is likely to mean that future costs of chronic health and nursing home care will be lower than in many current forecasts.19 Again, conventional thinking seems to ignore these changing numbers. The CBO, for example, continues to assume a much smaller decline in disability through 2040.
A number of other statistics give further reason for optimism in the future of entitlement programs, and more reason to question some official projections. For example, the total number of nursing home residents of any age declined 4.6 percent from 1998 to 2004.20 Part of the reason may be the more rapid declines in mortality among older men than older women, which in turn reduces the rate of widowhood for older women, who tend to use nursing homes more. Having more surviving spouses increases the supply of family caregivers and decreases the use of nursing homes.21 This decline suggests potentially significant savings in the Medicaid program as well.
Trends such as these have already rendered past projections obsolete and raise serious questions about current projections of need. For example, in 1991, the U.S. Senate Special Committee on Aging predicted that the older nursing home population would reach 2.1 million by 2005.22 That projection has proved to be far off the mark. In 2004, the older nursing home population was just 1.4 million, and declining.23 In other words, over little more than a decade, the Senate Committee's projection was about 50 percent too high. To the extent that projections fail to take into account a number of encouraging health trends such as these, they are likely to overestimate the future cost of nursing home and other expenditures.24