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PSY 320 Geropsychology

Public Policy in the Aging Society

Dr. Mark Henkels

WOU Political Science

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PSY 320

Outline:Demographics: “The Coming Generational

Storm”

Typical Concerns: The Federal Budget and Entitlements

Hidden Issues: Long Term Care, Diversity, and the Elder-Friendly World

Final Points: Politics and Going Beyond the Headlines

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PSY 320

The Coming Generational Storm:

The aging of the “Baby Boomers” fosters much concern, particularly regarding

whether the aged will consume the resources needed for future investment.

Without a doubt, the aging of American society will powerfully affect the future.

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Elements of Growth: Size of Older Population

POPULATION OVER 65 (US Census,2004)

2000 2030

United

States 35m(12.4%) 71m(19.7%)m

Oregon 438,000(12.8%) 881,000(18.2%)

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PSY 320: The Coming Generational Storm

U.S. Census: The Next Four Decades: The Older Population in the United States: 2010-2050. (May 2010)

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Two major demographic breakpoints: when the Boomers start reaching 65 and when they start reaching 85

<AgingStats.gov> 2012,

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PSY 320

The Coming Generational Storm:

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PSY 320

2004 Per Capita Health Care Costs

National Average: $5,276

Over 65: $14,797

Over 85: $25,691

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group.

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PSY 320: Dependency Ratios Number of Non-Working Age people per 100 Workers

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PSY 320: Federal Budget Concerns

The Deficit:

2012 Estimated Deficit: $1.4 Trillion

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PSY 320

Federal Spending Breakdown:

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PSY 320

Aged Receive most Federal Mandatory Spending: Social Security, Medicare, and Much Medicaid

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The challenges of Social Security and Medicare challenges are visible to all

Americans.

Medicaid and the Older Americans Act hit senior services more directly at state

and local levels.

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Social Security: “trust funds” exhausted in 2035.

Continued revenue would provide for about 75% benefit level sustainably after.

15Social Security Administration, 2012

Since the trust fund is not respected, the current unsustainability of Social Security is clear.

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Social Security is fixable (mathematically!) by simple tax or benefit adjustments.

CBO estimates 1.6% payroll tax increase would pay for program for 75 years.

Social Security Administration in 2005 calculated that taxing all earnings and providing corresponding benefits would pay 95% of shortfall.

Changing inflation indexing of benefits is often cited as relatively simple cure.

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Medicare verse MedicaidMedicare: Nearly universal coverage for

those over 65, plus some with disabilities and dependents

- Completely federal- Funded in part by direct payroll tax

Medicaid: Coverage for those with low income

- Federal and state share funding- No specific revenue source

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Medicare: Four PartsPart A: automatic enrollment- hospital, skilled nursing, home health care, and

hospice: care for acute conditions.

Part B: Optional subsidized coverageGeneral health care coverage: standard medical

services and tests, outpatient services- Basically fee for service model

Part D: Optional subsidized prescription drug coverage

Part C(“Medicare Advantage”): managed-care/HMO-style alternative to Part B. Can include drug coverage.

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PSY 320

Medicare: Kaiser Family Foundation information

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Medicare: inextricable from larger health care issues

-$36 Trillion projected actuarial liabilities (Health Care Financial Management 2010)

- Costs are driven by demographics and medical prices

- Constant pressure to control costs

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Medicare: Commonly proposed incremental budget solutions

- Increase payroll tax

- Care delivery reform: example: protocols at end-of-life care

- Cost shifting to seniors via premium increases or benefit decreases

- Change reimbursement of providers

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Medicare: Radical reform Voucher system: defined contribution rather than defined benefit gives government certainty in spending

Paul Ryan(R-Wi) plan would shift costs to seniors since benefit index is set below average health care expense increases

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Medicaid:

Elderly are 25% of beneficiaries, but account for 68% of expenditures (National Governor’s Association, 2011)

Long-tem care is about 48% of Medicaid spending(Kaiser Family Foundation, 2011)

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Distinctive Aspects of Medicaid Budget- as entitlement, costs are driven by eligibility rules and medical prices

- combined federal and state funding

- competes with other state and federal general fund programs for money

- requirement for matching money may leave federal money unclaimed

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States and Medicaid

Oregon must pay 38:62 match for federal Medicaid money.

If Oregon cuts state funding for Medicaid by $38 million, there will be a total cut of $100 million in the program

$38M state cut creates $62m federal cut = $100 Million total cut.

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Hidden Issues: Long-term CarePeople over 70 needing personal care:

2000: 10 million

2020: 15

2030: 20

Of those currently with limitations: 53% do not anticipate family help

- African-Americans and Hispanics expect more family help

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Long Term Care: Informal

Spouse are first line of caregiving: provide between 35% and 40% of chronic care

Disparate by gender: 73% older men married compare to 41% older women(2001)

- 37% of women and 10% of men will be caregivers

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Caregiving: Informal

Daughters (and sons) as caregivers: new complexities:

- Divorce, fractured families- Working mothers- More geographical dispersion

“Sandwich generation”, especially with later childbirth, must balance dependency of old with children

- Some have 70 year-old mothers and 90 year-old grandmothers

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Public Long Term Care

Many public home care programs coordinated and supported through Older Americans Act

“Area Agencies on Aging”: in Oregon work through the regional Senior and Disabled Services offices

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Oregon Service OptionsIn-Home Services Relative Foster Care

Adult Foster Care Homes

Assisted Living Facilities

Residential Care Facilities

Nursing Home

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Long Term Care CostsThe average costs in the United States (in 2009) are:

$198/day for a semi-private room in a nursing home ($72,270 year)

$219/day for a private room in a nursing home ($79,935 year)

$3,131/month for care in an Assisted Living Facility (for a one-bedroom unit) ($37,572 year)

$21/hour for a Home Health Aide

$19/hour for a Homemaker services

$67/day for care in an Adult Day Health Care Center

National Clearinghouse for Long-term Care Information<http://www.longtermcare.gov>

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Challenges in long-term careDecline of family networks

Workforce issues

Finances- About 10% of seniors have private

coverage: A 60-year-old might pay $200 a month for a policy that pays $150 a day for a maximum of three years

- Basically people spend down private resources until poor enough for Medicaid to kick in

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Importance of Medicaid in Long term Care

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Policy changes will not affect

all elderly the same.

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Hidden Issue: Economic Diversity

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Hidden Issues: Racial Diversity

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Hidden Issues: Creating an Elder Friendly World

Some important considerations Transportation:

- Driving: autonomy verse safety- Transit systems: adequacy, affordability and safety

Workplace: - ergonomics- organizational flexibility- social factors

Technology

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Political Impacts of the Older VoterFour Considerations:Far more reliable voters, especially in

primary election.

Not largest group

Oldest voters are more conservative.

Older voters depend on Medicare and Social Security

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Political Impacts of the Older Voter

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George Binstock, The Gerontologist, 2010

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George Binstock, The Gerontologist (2009)

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George Binstock, The Gerontologist (2010)

GOP VOTE 2010Over 65: 59%60-64: 51%50-59: 53%45-49: 56%40-44: 53%30-39: 48%25-29: 44%18-24: 39%

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Political Impacts of the Older VoterConsiderations:

Cohort effect: Seniors related to McCain far more readily than to younger less traditional Obama. Generally this favors Republicans.

Special issue concerns: Social Security and Medicare

Are Baby Boomers bringing different values into old age?

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Political Impacts of the Older Voter

The older voter cannot be ignored, especially in the primary election and low turnout elections (2010).

The older voter may significantly change as baby boomer retire.

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Final Thoughts

Meeting the challenges is important, but panic is not warranted.

“Bending the curve” approaches can work here.

Key investment area: diversity of long-term options.

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Final Thoughts

This is a new era for humanity.

New visions of the life course will be necessary.