Medicare Impact

A long life is something most people strive for, but the surge of centenarians is raising new concerns and creating the potential for financial problems. Increased lifespan has a heavy impact on Medicare and Social Security and imposes a negative outlook for both. A centenarian, as defined by Merriam-Webster’s dictionary, is a person who is 100 years or older. The entire effect on the economy is not simply because a person is 100 years old. Problems arise in the years between the average age of death and the actual age of death. Those in between years are where the negative effects on the economy arise.

Medicare is greatly impacted by the increase in longevity. The life expectancy in the United States is currently 78.8 years, but Medicare

With the increase in age, comes an increase in age-related chronic illnesses. Dementia and Alzheimer’s disease are expected to almost double every 20 years as life expectancy increases. There is also an increased need for specialized health care workers. By 2030, it is estimated that 36,000 geriatricians will be needed in the U.S. In 2008, however, there were only 7,000 practicing geriatricians. As health care costs increase, Medicare could be pushed to its breaking point. As a result of the Baby Boomer phase, there is an increasing elderly population in America. A baby boomer turns 60 every eight seconds. Increased life expectancy partnered with declining fertility rates are causing the population to age (Everyday

To try to fix the imbalances previously discussed, two main changes have been suggested: take more in and send less out. Currently Social Security is financed by a 12.4% tax on wages and salary, up to $118,500. The ‘take more in’ approach would be executed by raising the tax by 2.9% or removing the cap to close the funding gap. The ‘send out less’ approach is the less accepted approach, because it is seen as more beneficial to those with higher incomes. The main focus of this approach is getting people to retire later, but people with higher incomes enjoy higher life expectancies. This could result in people with lower incomes to work a higher percentage of their life than their wealthier counterparts. Andrew Biggs, a retirement policy expert at American Enterprise Institute, stated about this approach, “You’re essentially punishing low-income people for a problem they didn’t cause.” (New York