Red, White, and Gray: The High Cost, and High Rewards, of Longer Lives
Americans' rising longevity threatens fiscal calamity and generational warfare. But with improvements in health and political courage, a grayer society will grow in wealth.
Live long and prosper? You bet. Americans' rising longevity threatens fiscal calamity and generational warfare. But we have reason to think a grayer society is a richer society.
WEST BRIDGEWATER, Mass.--It's noontime on a Wednesday at the town dump in this small (population: 6,600), middle-class community 30 miles south of Boston. This means that Bill Weleck, a 64-year-old retired mail carrier, is due for his four-and-a-half-hour work shift. He bicycles in, as usual, and dons a town-issued, fluorescent-green vest and a pair of gloves, then starts sorting through bags of plastic bottles in search of recyclables. The air is a tad pungent, but that doesn't bother Weleck, who looks forward to the work. As he puts it, "What would I be doing at home? This gets me out into the community."
Weleck isn't working for wages. He is compensated for his time by an abatement on his property taxes worth up to $750 per year. The state's "senior property tax work-off program" is popular with fiscally strapped Massachusetts towns that can't afford to pay union-scale wages for needed work. Some 30 residents in West Bridgewater, ranging in age from their mid-60s to mid-80s, can be found not only at the dump (a much-desired worksite among the men) but also at the library, the forestry and maintenance departments, and the warrens of town hall. "The girls I have--and I call them girls--want to learn," said Karen Lavin, a Building Department supervisor for a rotating crew of seniors who greet customers at the window, answer the phones, and help to process permits. "In my opinion, they're worth every penny."
Americans, it's no secret, are living longer than ever. Life expectancy at birth, currently about 78 years, is increasing at the rate of roughly 1.5 years per decade. Baby boomers, born between 1946 and 1964, are turning 65 at the rate of 10,000 per day. The number of Americans age 65 or older, a mere 20 million in 1970, is on track to rise from about 40 million today to some 70 million by 2030. The share of seniors in the population, now about 13 percent, will reach 18 percent by 2030. The ranks of Americans who survive into their 90s are expected to soar from 1.9 million in 2010 to 9 million in 2050.
Long life may well be a blessing for the individual. But is it also a blessing for society? The fashionable answer is an increasingly anxious no. Choose your apocalyptic metaphor. The aging of America represents a "financial time bomb," The New York Times has proclaimed--with the solvency of Social Security, Medicare, and Medicaid (the last in line for nursing-home payments for patients who have depleted their assets) all at risk. Foreign Policy magazine has warned that a "gray tsunami is sweeping the planet," the United States included.
And yet the forecast that Americans' increased longevity is a collective downer for the nation ain't necessarily so. The fiscal threat, while real, provides too narrow a prism for understanding a question so complex. History suggests that the size of the total economic pie tends to grow larger as life expectancy rises. From 1950 to 2010, Americans' life expectancy at birth grew by 15 percent and, at age 65, by more than 30 percent--even as household incomes and the gross domestic product increased sixfold.
So, as counterintuitive as this may sound, it is possible, even likely--listen up, worrywarts!--for Americans to live longer and grow richer.
Everything depends on two variables. The first is the health of older Americans, now and in decades to come. Will we have a population of bedridden elders subsisting in nursing homes as wards of the state, or will seniors be relatively able-bodied contributors to the economy, whether by working or by spending money on golf outings or gifts for the grandchildren? The difference for society is huge.
The second crucial factor is public policy. Will government take an imaginative and flexible approach to contributions that seniors can make--as exemplified by West Bridgewater's tax work-off program? Will Washington relieve the fiscal stress on entitlement programs by, perhaps, raising the age of eligibility for Social Security and Medicare commensurate with the increase in life expectancy?
Nobody can say. But experts cite grounds for optimism, especially in regard to improvements in health. Medical advances make it likelier that seniors will spend a diminishing portion of their remaining days in pricy nursing homes. "People are staying healthier longer--we're not producing a generation of really sick old people," said David Canning, a professor of population science, economics, and international health at Harvard's School of Public Health. "From the individual's point of view, this is good news. From society's perspective, this is also good news."
"NEVER ACT YOUR AGE"
The fancy term for what Canning described is "compression of morbidity" the squeezing of serious illness, of all "morbid" conditions that cause death, into as short a time as possible at life's end. Maximize the living, minimize the suffering, is one way to think about it. A personification of this principle is 106-year-old Signy Moen of West Barnstable on Cape Cod. Born in 1905, she tells of a childhood on a Norwegian farm with no electricity, of hopping on a ship to America by herself at age 18 ("I wanted to go places"), and of working as a Rosie the Riveter in a factory in Chicago making airplanes during World War II. And she recounts stories of her husband, who died in 1974"a good man; I miss him," she says, gently rocking in a parlor chair, a red blanket on her lap.
A wonderful life. But from society's point of view, maybe the most remarkable thing about it is how slight a financial burden Signy Moen represents. She lives not in a nursing home but in a house on grounds that her family owns. She doesn't take any prescription medicines--"I don't have any pains." (Her drug of choice is a nip of Baileys Irish Cream at day's end.) She fixes her own peanut butter and jelly sandwich for breakfast.
The future promises more of these healthy, vibrant centenarians, according to Thomas T. Perls, a geriatric physician at Boston University's medical school and the director of the New England Centenarian Survey, the world's largest such database (which includes Signy Moen). The number of centenarians in the U.S. grew from 2,300 in 1950 to 79,000 in 2010--and may top 600,000 by 2050. Research could spur a new wave of age-delaying drugs; scientists are experimenting on removing "senescent cells," believed to accelerate the aging process, from mice.
Already, the United States is undergoing a sort of cultural revolution on aging--60 is the new 40, and all of that. The subject has spurred a burgeoning literature, stocked with recent titles such as 100: How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family and Faith by Sonia Arrison (really, everything?) and Susan Jacoby's Never Say Die: The Myth and Marketing of the New Old Age.
Proselytizing for the revolution are the likes of "Dr. Roger"--Roger Landry, a physician who promotes "a culture of successful aging" in rousing speeches at senior centers nationwide. "Never act your age," he told a recent gathering at the Chatham Senior Center on Cape Cod. Why? "When you buy into that, it is buying into age as decline." The good news, Landry went on, is: "Your purpose doesn't end after you retire, your kids are gone, and the dog dies. You are now at a point of being unencumbered." Check any thoughts of moving in with the obliging daughter or son: "You never want to live with your kids," Dr. Roger advised, because "they want to make your life risk-free." On the slide screen flashed a quotation from the 19th-century novelist George Eliot: "It's never too late to become what you might have been."
Asked afterward if he agreed with this inspirational message, 76-year-old Stu Tuchinsky shot his questioner an even look and replied, "I live it." Mary Chesnut, 77, said of Dr. Roger, "He was right on." Two years a widow, she has joined a group of "wild women" who regularly play canasta and the like. (American women at 65 are apt to live an average of about 20 more years, nearly three years longer than men of that certain age--although this gender gap is narrowing.) Opinion polls suggest that baby boomers, ages 47 to 65, are receptive to an anthem of independence. A recent survey by the Associated Press/LifeGoesStrong.com found that 73 percent of them expect to continue to work past age 65. (See sidebar, p. 8.)
AN ELDER ECONOMY
In the short run, in an economy stuck at close to 9 percent unemployment, a decision by baby boomers to keep working past 65 (or once retired, to return to the job market) may well restrict younger workers' job prospects. "In a slack job market, certainly, people postponing retirement does mean fewer job openings for prime-age and younger workers," said Monique Morrissey, an economist at the Economic Policy Institute in Washington. Moreover, the temporary "surplus of labor" partly created by the big labor pool of seniors also exerts downward pressure on wages, according to Dean Baker, codirector of the Center for Economic and Policy Research in Washington. That's especially true for jobs--in retail, say--for which a senior and a young person may compete directly.
But in a healthier economy, and presumably in the long run, the presence of more seniors in the labor force would likely be a plus: Instead of displacing younger workers (or anyone else), they would add to the total economic output. There's precedent. The entry of more women into the workforce in recent decades hasn't meant fewer jobs for men, Morrissey noted, but rather a stronger and wealthier economy overall.
The economy, like the culture, is finding some benefit in Americans' ever-longer life spans. The business of caring for the elderly has changed seismically in recent decades and now ranks among the economy's most dynamic sectors. Starting in the 1970s, "elder care" expanded beyond nursing homes to include so-called assisted-living institutions that provide services (meals, laundry) in apartment-like settings. The business of delivering health-related services to seniors at home is booming. The size of this market more than quadrupled, to $46 billion, from 1999 to 2007. Even in a sluggish economy, industry executives expect the sector to add 100,000 jobs in 2011.
Technology is driving this growth. Cutting-edge products such as "companion robots," designed to resemble dogs or baby seals, can make it easier for seniors to stay in their homes. Techno-savvy baby boomers, accustomed to using baby monitors and other gizmos in raising their children, may employ the latest devices to manage their own well-being. America's grayest places--in the 2010 census, Scottsdale, Ariz., ranked No. 1 in median age, at 45.4 years--could serve as frontiers in an elder-care economy. An aging population might act as a spur to entrepreneurs.
HIGH COST OF LONG LIVES
Even so, revolutions in technology and culture have their limits. Sadly, many seniors are cognitively impaired, no longer capable of using a cell phone or a computer, much less of reinventing themselves to become what they "might have been." Debilitating, slow-killing diseases such as Alzheimer's--which afflicts more than 5 million Americans and costs Medicare and Medicaid $130 billion annually for treatment--confine many older people to years in a helpless twilight.
In this context, the fiscal worrywarts certainly have a point. Absent changes in public policy, a financial time bomb could well explode. The most pressing concern is Medicare. Federal spending on the program grew from 1.7 percent of GDP in 1985 to 3.6 percent in 2010, totaling $520 billion for the 48 million participants. If nothing changes, the Congressional Budget Office predicts, Medicare spending will nearly double its share, approaching 7 percent of GDP, by 2035.
Social Security is in better shape, despite a published report that its trust fund is paying out more than it is taking in. The program disburses an average lifetime benefit of $300,492 to 44 million retirees and is running a $2.6 trillion surplus. But the surplus will be gone, the trustees say, by 2037. By 2050, Medicare is on track to pay 83 million retirees--nearly twice as many as now--an average lifetime benefit (in 2010 dollars) of $554,942.
These twin entitlement burdens, if left unaddressed, could provoke not only a fiscal calamity but also a political firestorm. Regressive payroll taxes, after all, finance all of Social Security and 35 percent of total spending on Medicare. (Beneficiaries' premiums account for only 12 percent of Medicare expenditures.) This wasn't a problem in 1960, when five Americans were in the workforce for each retiree. But this ratio has declined to 3-to-1 and is expected to shrink to 2-to-1 by 2030.
The political climate is ripe for generational warfare between the workers who pay for Medicare and Social Security and the elderly who benefit. Demagoguery is one result, as in Texas Gov. Rick Perry's likening of Social Security to a Ponzi scheme. (A true Ponzi scheme requires secrecy.) Cynicism is another. A Gallup Poll in 2010 found that six in 10 workers held no hope of receiving Social Security. Among Americans ages 18 to 34, the proportion of pessimists ballooned to three-fourths.
DEATH AND TAXES
Fortunately, a politics of bitterness isn't foreordained. Two main public-policy remedies could help the nation prepare for a future in which people live longer. The first: taking steps to stretch out the years of a healthy life--that is, to accelerate the compression of morbidity. America has made remarkable progress over the decades; life expectancy at birth has increased by nearly 30 percent since 1933, when it stood at 61 years. Still, considerable room for improvement remains. The onetime East Germany--yes, the former Communist state that's now part of the unified German republic--has attained a longer life expectancy at birth, of nearly 80 years, than America's 78. Among the United Nations' member countries, the U.S. ranks a middling 34th in life expectancy at birth, just above Albania. Japan is first among major nations, at over 82 years.
What to do? The government could try to improve public health by taking steps--using the tax code, for example--to alleviate conditions such as obesity, which lengthens morbidity by raising the risks of heart disease, stroke, and diabetes. Since 1980, the rate of obesity has more than doubled (to 35 percent) among Americans 20 and older and nearly tripled (to 17 percent) among children ages 2 to 19. The Center for Science in the Public Interest has proposed that the government levy a stiff tax on soda, as it does on tobacco.
Boston geriatrician Perls goes so far as to suggest taxes on meat--yes, the T-bones and ribs that Americans savor--to curtail consumption of those cholesterol-suffused, artery-clogging instigators of heart disease and stroke. It isn't a coincidence, he said, that Seventh-day Adventists live to 88, on average, a decade longer than the populace as a whole: For more than a century, the church has defined a godly lifestyle as including a diet that favors fresh vegetables and fruits, whole-grain breads, and low-fat dairy products but avoids beef, lamb, pork, and chicken as well as coffee, tea, and alcohol.
The certainty that retiring baby boomers will add to the strains on Medicare and Medicaid may or may not nudge a financially strapped government to spend more on research to cure Alzheimer's and other lingering diseases. The National Institutes of Health devotes $469 million of its annual $31 billion budget to Alzheimer's research--a pittance, critics say, considering that annual treatment costs may reach $1 trillion by 2050. NIH's director, Francis Collins, told Congress earlier this year that the projected tab could be reduced by half if improved detection and treatment could delay the onset of Alzheimer's by five years. He noted that a massive research effort into heart disease had contributed to a 60 percent reduction in coronary-related deaths.
Washington could also help to curb the financial dangers posed by an aging population by overhauling the entitlement programs that pay benefits to the elderly. This would entail renegotiating, in effect, the bargain between the country and its growing ranks of seniors. A big step, as suggested by Nicholas Eberstadt, a demographer at the American Enterprise Institute, would be to raise the age of eligibility in line with longer life spans.
Today, workers born before 1938 can receive full Social Security benefits at age 65; the eligibility ages rises gradually for those born later, so that workers born after 1959 must wait until they're 67--starting in 2027--for full benefits. (Any worker may take reduced benefits at age 62.) Even as Americans' life expectancy keeps rising, current law has no provision to raise the retirement age beyond 67. Third Way, a centrist Democratic think tank in Washington, has proposed gradually increasing the retirement age to keep pace with life expectancy, thereby lopping a cumulative $1 trillion from the trust fund's payments by 2040.
Similarly, postponing eligibility for Medicare could yield substantial savings--of 7 percent by 2035, according to CBO, if Americans must wait until they're 67 to receive benefits. "Raising the eligibility age to track with increased life expectancy is the best way to preserve Medicare while reducing the cost to taxpayers," said Veronique de Rugy, a senior research fellow at George Mason University's market-oriented Mercatus Center.
Another oft-proposed solution is to reduce or eliminate entitlement benefits for high-earning seniors. Such means-testing seems in line with the progressive taxation of income, a cornerstone of the federal tax code, but it would save far less than raising the eligibility age. Third Way's proposal for Social Security would save a half-trillion dollars by 2040 by phasing out benefits for seniors with individual incomes of $150,000 (for couples, $200,000), but twice as much by indexing the retirement age to life expectancy.
These prescriptions have the advantage of political plausibility. Republican presidential candidate Mitt Romney, often cautious to a fault, recently called for raising the retirement age for Social Security and the eligibility age for Medicare in step with increases in longevity. He also backed means-testing for Social Security. President Obama and House Speaker John Boehner agreed on raising the eligibility age for Medicare before their talks about a grand bargain on the federal debt fell apart last summer.
Washington could also rescind the active disincentives--punishments, really--it metes out to Americans who choose to work past 65. The seniors who sign up for West Bridgewater's program must declare the value of any property-tax abatement as income in their federal tax filings (though not their state filings). The town must also pay for participating seniors' contributions to Medicare. Mary Harrington Graf, director of elder services for the West Bridgewater Council on Aging, declared, "The big nonsupporter of this program is the federal government."
HEALTH = WEALTH
Thomas Malthus was wrong. The 18th-century British philosopher famously predicted that life on Earth was doomed because the planet's food supply grows arithmetically while its population expands exponentially. The only thing that could save humankind, he warned, was multitudes of deaths--caused by war, pestilence, or some other catastrophe. To put the Malthusian proposition in economic terms (as many economists have done), a shorter life span is a plus, allowing a nation to spread its wealth more generously among a smaller population.
Malthus failed to anticipate, however, the productivity of the Industrial Revolution or the spectacular improvements in public health (springing from the mid-19th-century discovery of germs) that would ease his grim equation. Science and machinery extracted greater crop yields from the same acreage. From 1820 to 2001, the world's population increased by nearly six times while per capita income increased ninefold. Over the same period, life expectancy in the West shot up from 36 to 79 years; in the rest of the world, from 24 to 64.
The essential lesson, for Americans and everyone else, is that improved health (for which increased life expectancy is a gauge) is itself a driver of wealth. Harvard's Canning is fond of noting that the causal arrow runs in both directions. When a society is growing in wealth, it can devote more resources to improving the health of its people. So, more wealth, better health. It is also true that when a society is healthier, its workers are likely to be more industrious and productive, creating more wealth. So, better health, more wealth.
Think of a flu epidemic threatening to wipe out a city, confining workers to bed. If a vaccine can restore everyone's health, wage earners go back to work. Wealthier societies are healthier, and healthier societies are wealthier. Evidence: The United States circa 1900, when just 4 percent of the population was 65 or older, was far poorer than today's America, with more than triple that share.
As the numbers of the aged grow, societies as diverse as China's and America's will grapple with the challenge, following starkly different cultural and political norms. A nation such as this one, that prides itself on personal reinvention, is apt to do just fine in rethinking the culture of aging. The U.S. economy, still one of the world's most flexible and innovative, is also bound to adapt.
The hardest challenge may be the political one. As the baby boom turns into an elderly boom, the federal government has no choice but to be deeply involved. Even privatized solutions to the ever-costlier federal entitlement programs, favored by conservatives who want Washington out of the way, would require landmark legislation to repeal chunks of the New Deal and the Great Society. That would take government action.
All of this suggests that the current political paralysis includes among its victims any hope of a coherent strategy for handling the demographic certainties of a graying population. Since this nation began, Americans have been living longer and enjoying greater prosperity. There is no defensible reason the 21st century should be any different.