Consequences of an Older Population - Report Example

Consequences of an Older Population Table of Contents Table of Contents Consequences of an Older Population 2 Impacts of the Older Population 3 Medicare 5 Medicaid 6 Reform Areas 6 Social Security Reform 6 Medicare and Medicaid Reform 7 Focus on Older Americans Act (OAA) 8 Establishment of an Affordable and Viable Delivery System for the Elderly 8 Recommendations 9 Conclusion 10 Consequences of an Older Population United States is experiencing an unsustainable increase in the number of elderly people owing to the decline in birth rate and increased life longevity. The longevity of life is caused by improvement in health care, safety and enhanced social security programs. These factors offer the necessary conditions for prolonged life. The decline in birth rate is a product of enhancement of family planning methods and reduced fertility. This has reduced individuals available to replace the potential retirees thereby creating an imbalance between the working population and elderly. Another contributing factor is the baby boom generation, which is expected to attain 65th birthday between 2011 and 2029. Increased elderly individuals have multiplied pressure on the national pension and health care programs. This is because the ratio of the working population and the dependent elderly people has declined. The key strategy necessary to curtail the dependency challenge of the older generation is for the community to view the elderly as a resource and not a liability. Higher and controlled birth rates will assist in the replacement of the retiring older population. Increased numbers of the working population will generate more revenue required for funding the health and retirement programs. This paper discusses the political embattlement of programs for the aged and options suitable to relieve the burden. Impacts of the Older Population Approximately 70% of the United States government’s expenditure is directed to Medicare, Medicaid and other social security programs. The spending on these programs is expected to grow steadily due to the increase in the aging population. The dependency ratio in the United States is expected to increase from 22 percent in 2010 to 35 percent due to the expected retirement of the baby boomers and the decline in the working population (Bremner, et al., 2010). Older individuals require complicated health care needs compared to the younger generation; a necessity that enhances pressure on the social security programs and increases the future health care demands. The elder people are vulnerable to chronic disease such as cancer and diabetes as compared to the younger generation. For instance, in the United States 84 percent of adults over the age of 65 years suffer a chronic illness compared to 38 percent of individuals under the age of 44 years (Wu & Green, 2000). They also take more prescription drugs as compared to the younger generation thus increasing the health care expenditure. Older people are vulnerable to physical deformities such as breaking bones after falls contrary to the younger generation. This implies that they constantly require sophisticated medical attention. Their productivity is low relative to that of the younger people, due to their cognitive and physical limitations. This implies that most of the activities will require the intervention of the younger people who are few in number. The U.S. Department of Health and Human Services (2003) asserts that 35 percent of elderly people above the age of 65 have activity limitations compared to 6 percent of those between 18 to 44 years. The needs and utilization mode of the baby boomer generation is expected to be different from that of the current older generation. Taking care of them will require more resources and technological intervention than that of the current generation. The baby boomer retirees will be more culturally diverse. Therefore, the personnel being assigned for their care will require advanced training on multilingual skills and cultural competence. Their technological sophistication will require advanced services such as constant updates on health care from the internet. Satisfaction of these needs will require more financial resources to make the services available to them with possible measures such as increase taxes. Social Security Pension costs are expected to increase hastily owing to the eligibility of the baby boomers that are attaining retirement age. The rise in the retiree population does not correspond to the increase in the working class that is expected to replace them and generate the required revenues from payroll taxes. According to Aaron and Orszag, the 2004 figures indicate that the social security program was running a cash-flow surplus of 164 billion dollars. Projections indicate that the accumulated reserves and benefits are expected to cover the social security benefits through 2042. Most of the attempts to reform the program have recently hit a snag owing to increased political interference. For instance, the 2001 proposal by social security commission suggested that any attempts to cut the retirement benefits of those people about to retire is politically unacceptable and legally unsound. Medicare This is the prominent financier for the health requirements of the older generation in the United States. Medicare hospital insurance benefits include inpatient hospital care, hospice care and skilled home health care. These benefits are financed by the payroll tax of 2.9 percent of worker earnings and income tax. The accumulated benefits are expected to cover only 71 percent health care benefits through 2026. The Medicare challenge is more pronounced than that of the social security program. This is because it depends on the expansion of per capita health care costs, in addition to the economic and, demographic impacts. Medicare supplemental medical insurance program covers benefits related to doctor’s services, durable medical equipments and outpatient vaccines among other services (Kronenfeld, 2011). The expenditures on this program are expected to rise due to the increase in the number of beneficiaries and per capita medical costs. The increase in the number of the aging population will cause an increase in the necessity to employ more workers to take care of them. Expenditures on the incentives and disincentives will be required to enable the older individuals to access certain services. Medicaid The Medicaid program takes care of the financial needs of the poor as well as premiums, cost sharing and deductibles for the people enrolled in Medicare. Most of payments from the program are normally remitted in the nursing homes and home health programs (Powell & Cook, 2009). The current decade has witnessed the rise in the expenditures involving Medicaid contrary to that of Medicare. The recent recession has forced many states to reduce the program services and eligibility to curtail costs due to the bloated Medicaid rolls. The challenges being faced by the program have been multiplied by changes in the proportion of the population in relation to poverty and state policies. Reform Areas Social security, Medicare and Medicaid programs have monumental negative impacts on the stability of the national budget. Reforms geared towards curtailing their impacts should be implemented early to spare the larger youthful population the burden of facing tax increases and benefit cuts. Apart from being enacted in time, these reform programs should be effective in balancing the federal budget through the next decade. Social Security Reform The strategies geared towards reforming the social security program should focus on increasing the life expectancy and improving the inflation adjustments. Offsetting the increased life expectancy will require the reduction in the value of the benefits from the age of claiming until death. The annual benefits should be reduced to counter the increased payment duration in line with the increased life expectancy. The increased costs emanating from life longevity can be offset through annually changing the benefit formula. The social security burden can also be minimized through improving the inflation adjustments which can cut down the benefits for both retirees and near retirees. The adjustments should be improved through developing an improved mechanism to measure the cost of living as the reliance on the consumer price index can exaggerate the costs. The current long-term balance of the current social security program should be restored through focus on benefit and revenue changes. The formula for awarding benefits should be offset to counter the costs being generated from the increased life expectancy. The retirement age should also be increased to withhold the benefits longer and increase revenue through prolonged taxation period. The revenue base can be improved through including 90 percent of worker earnings. The newly hired state workers should also be covered in the program to generate more revenue. The payroll tax can also be increased above that of the social security earning to compensate the already distributed benefits and minimize the deficit. Diverting the social security benefits into individual incomes strategy will help in offsetting the government expenditure hat occur due to the increased on social security programs. However, Becker and Fred (2007) warn that implementation of such measures will be subject to political opposition. Medicare and Medicaid Reform The government should embark on lowering the premium subsidies for the high income earners. This ensures that more income is generated from supplemental medical insurance schemes. Additionally, more low income earners are encouraged to retain their membership contributions in these schemes. Measures should be put in place to cut down the payments remitted to the teaching hospitals whose bonus is roughly as twice as much as the required amount. The payments being made on care plans should be reduced as they are more than the costs incurred through traditional Medicare. The Medicare programs should reduce the payments they make to the managed care to adjust the service cost based on those of the traditional care. Reforming the Medicaid program will also require adjusting the upper-payment limit allocated to every state as a relief for the Medicaid expenses incurred for the enrollees. The federal government should ensure that the upper limit is equal to the Medicare to prevent corruption. Focus on Older Americans Act (OAA) This is a primary vehicle used for organizing and delivery of welfare services for the old. The service areas include elder justice and abuse, counseling, mental health, civic engagement, care giving and proof-based health promotion and disease prevention (Joo, Wittink and Dahlberg, 2011). The act should be fully implemented by the authorities as it gives the elderly autonomy to access the services related to their welfare. Establishment of an Affordable and Viable Delivery System for the Elderly The challenges caused by the presence of the elderly people in the society should be considered as a community issue; should be handled collectively. The care of the aged individuals should not be wholly considered as a responsibility of formalized systems for the old. Leaving the government institutions such as Medicare and social security to cater for all the needs of the aged will strain the budget and lead to eventual deficits in the programs. Families should frustrate some of the burden such as health complications caused by physical injuries (Bremner et al, 2010). This will help to reduce the budgetary allocations required for the old. The community should create a suitable environment that encourages the elderly to function as productive and independent elements of the society. The key strategy to lessening the dependency challenge of the older generation is to view the elder people as a resource and not a liability. Alternative employment opportunities should be established for the elderly. However, the involvement of the elderly population in employment is not a guarantee that the productivity will be enhanced to balance the profound demographic change. The employing institutions have an obligation to ensure that those enrolled in employment schemes under the program have the required skills and motivation to undertake the assigned responsibilities. The working conditions should be enhanced to encourage the elderly workforce perform as expected. Recommendations The premiums charged on those enrolling for social welfare programs should be dependent on the income levels. The high income earners should pay more while the low income earners should be charged less. This ensures that the program generates enough revenue and income for domestic expenditure. The elderly working population should be included in the taxation scheme in order to increase the government revenue and reduce the national expenditure. This ensures that the elderly are recognized as active and productive contributors of the country’s economic progress. The pension schemes should be changed to encourage late retirement. This will give the government ample time to collect more tax deposits from the population and increase reserve. The financial institutions should increase access to small loans and grants for the elderly. Most of the elderly people would not perform in jobs that require application of much energy or commitment. The loans and micro credits offered will assist them indulge in business activities that are less demanding in terms of energy input as well as convenient for their age. The legislation should be implemented to include age discrimination policies that prevent exploitation of the elder generation (Quadagno, 2011). If applied in the work places, the policies will encourage the elder people to fully commit in the employment leading to increased output and reduced dependency. The health care should also be expanded to improve the well-being of all old people to increase their performance capacity. Although improving the fertility rates may bring mixed results, a more supportive environment for raising children should be provided by the society to ensure a balanced transition of the workforce. Other factors that can be applied in dealing with an ageing population include: encouraging larger families that give rise to more youths and encouraging immigration of the working population to contribute to the state though increased taxation. Conclusion The decline in the birth rate and increased life longevity are the two crucial factors contributing to increased elderly people in the United States. Another factor is the decline in the birth rate which is a product of the implementation of government policies regarding birth control. The baby boom generation that is currently attaining the 65th age mark has also contributed to the prevalence of the elderly population in the United States population. Aging affects the social, economic and political institutions as well as the interpersonal and family relationships. Balancing the current budget is an essential aspect for laying the foundation for a stable future economy. This is because the future economic conditions will be characterized by considerable budget challenges. This is because many people are expected to be eligible to retirement benefits and Medicare. This will lead to deficits in the budget due to huge spending. Regulating the budget through application of balancing methods will prepare the economy and the federal budget to counter the expected challenges. Balancing encourages enhanced national saving. This increases the resource reserve and improves productivity as well as progressive reduction in the public debt. Social security and Medicare are the two main programs that are currently facing monumental deficits. If they are not addressed promptly they will lead to pronounced imbalance in the federal budget as well program beneficiaries. References Aaron, H. J., & Orszag, P. R. (n.d.). The impact of an aging population. Retrieved from http://www.brookings.edu/es/research/projects/budget/fiscalsanity/chapter5.pdf Becker., & Fred, W. (2007). Reactions to social security retirement reform proposals in the United States. International Social Security Review, 60(1), 101-114. Bremner, J., Frost, A., Haub, C., Mather, M., Ringheim, K., & Zuehlke, E. (2010). World population highlights: Key findings from prbs 2010 world population data sheet. Population bulletin, 65(2), 1-12. Retrieved from http://www.prb.org/pdf10/65.2highlights.pdf Burgess, M., & Applebaum, R. (2009). The aging network in todays economy. Generations, 33(3), 40-46. 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