Abstract
Official Medicare projections forecast that the elderly population will be less healthy and more costly over the next century. This prediction stems from the use of age as an indicator of health status: increases in longevity are assumed to increase demand for health care as individuals survive to older and higher-use ages. In this paper I suggest an alternative approach, in which time until death replaces age as the demographic indicator of health status. Increases in longevity are assumed to postpone the higher Medicare use and costs associated with the final decade of life. I contrast the two approaches, using mortality forecasts consistent with recent projections from the U.S. Census Bureau and the Social Security Administration. The time-until-death method yields significantly lower-cost forecasts. The hypothetical cost savings from improved health are small, however, relative to the size of the Medicare solvency problem caused by population aging.
Similar content being viewed by others
References
Berkeley Mortality Database. Retrieved February 1, 2000 (www.demog.berkeley.edu).
Board of Trustees, Federal Hospital Insurance Trust Fund. 2000. 2000 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund. Washington, DC: U.S. Government Printing Office.
Board of Trustees, Federal Supplementary Medical Insurance Trust Fund. 2000. 2000 Annual Report of the Board of Trustees of the Federal Supplementary Medical Insurance Trust Fund. Washington, DC: U.S. Government Printing Office.
Crimmins, E.M., Y. Saito, and D. Ingegneri. 1997. “Trends in Disability-Free Life Expectancy in the United States, 1970–90.” Population and Development Review 23:555–72.
Cutler, D.M. and E. Meara. 1999. “The Concentration of Medical Spending: An Update.” NBER Working Paper 7279, National Bureau of Economic Research, Cambridge, MA.
Fries, J.F. 1980. “Aging, Natural Death, and the Compression of Morbidity.” New England Journal of Medicine 303:130–35.
— 1984. “The Compression of Morbidity: Miscellaneous Comments About a Theme.” The Gerontologist 24:354–59.
Fuchs, V.R. 1984. “Though Much Is Taken: Reflections on Aging, Health, and Medical Care.” Milbank Memorial Fund Quarterly 62:143–66.
Garber, A.M., T.E. MaCurdy, and M.L. McClellan. 1998. “Medical Care at the End of Life: Diseases, Treatment Patterns, and Costs.” NBER Working Paper 6748, National Bureau of Economic Research, Cambridge, MA.
Hollmann, F.W., T.J. Mulder, and J.E. Kallan. 2000. “Methodology and Assumptions for the Population Projections of the United States: 1999 to 2100.” Population Division Working Paper 38, Bureau of the Census, U.S. Department of Commerce, Washington, DC.
Kannisto, V., J. Lauritsen, A.R. Thatcher, and J.W. Vaupel. 1994. “Reductions in Mortality at Advanced Ages: Several Decades of Evidence From 27 Countries.” Population and Development Review 20:793–810.
Lee, R.D. 1994. “Fertility, Mortality, and Intergenerational Transfers: Comparisons Across Steady States.” Pp. 135–57 in The Family, the Market, and the State in Ageing Societies, edited by J. Ermisch and N. Ogawa. Oxford: Oxford University Press.
Lee, R.D. and L. Carter. 1992. “Modeling and Forecasting U.S. Mortality.” Journal of the American Statistical Association 87:659–71.
Lubitz, J., J. Beebe, and C. Baker. 1995. “Longevity and Medicare Expenses.” New England Journal of Medicine 332:999–1003.
Lubitz, J. and R. Prihoba. 1984. “The Use of Medicare Services in the Last Two Years of Life.” Health Care Financing Review 5:117–31.
Lubitz, J. and G. Riley. 1993. “Trends in Medicare Payments in the Last Year of Life.” New England Journal of Medicine 238:1092–96.
Manton, K., L. Corder, and E. Stallard. 1997. “Chronic Disability Trends in Elderly United States Populations: 1982–1994.” Proceedings of the National Academy of Science 94:2593–98.
Olshansky, S.J., M.A. Rudberg, C.K. Cassel, and J.A. Brody. 1991. “Trading Off Longer Life for Worsening Health: The Expansion of Morbidity Hypothesis.” Journal of Aging and Health 3:194–216.
Robine, J.-M., P. Mormiche, and C. Sermet. 1998. “Examination of the Causes and Mechanisms of the Increase in Disability-Free Life Expectancy.” Journal of Aging and Health 10:171–91.
Singer, B.H. and K.G. Manton. 1998. “The Effects of Health Changes on Projections of Health Service Needs for the Elderly Population of the United States.” Proceedings of the National Academy of Sciences 95:15618–22.
U.S. Office of Management and the Budget. 2000. Historical Tables, Budget of the United States Government, Fiscal Year 2001. Washington, DC: U.S. Government Printing Office.
White, J. 1999. “Uses and Abuses of Long-Term Medicare Cost Estimates.” Health Affairs 18(1):63–79.
Author information
Authors and Affiliations
Additional information
Research for this paper was funded by Grant R37-AG11761 from the NIA. An earlier version was presented at the 1998 annual meetings of the Population Association of America, held in Chicago. Helpful suggestions were given by Ronald Lee, James Lubitz, reviewers at this journal, and participants at the PAA and at UC Berkeley’s Demography Brownbag Series. The model and data presented here are available at http://www.demog.berkeley.edu/~tmiller.
Rights and permissions
About this article
Cite this article
Miller, T. Increasing longevity and medicare expenditures. Demography 38, 215–226 (2001). https://doi.org/10.1353/dem.2001.0018
Issue Date:
DOI: https://doi.org/10.1353/dem.2001.0018