Michal Smith-Mello
From Foresight, Vol. 6, No. 3
published 1999
The Kentucky Long-Term Policy Research Center has launched a joint research project with the University of Kentucky Sanders-Brown Center on Aging. Over the coming months, we will explore the social and economic implications of Kentucky’s aging population. Our research plan calls for an examination of the financial preparedness, the labor force characteristics, the health status, and the social integration of current and future retirees.
Nationally, the aging of Baby Boomers, who will form the largest generation of older citizens in the history of the nation, is predicted to alter social orders and exert enormous fiscal pressure on federal and state budgets. Kentucky’s projected population, which experienced a net loss of its youngest members in the 1980s and has become a magnet for retirees in the 1990s, is aging more rapidly than most. As shown, Kentuckians age 65 and older are expected to rise in number while the youth population declines.
Figure: Kentucky Population By Selected Age Groups, 1980-2020
While doomsayers predict unmanageable public costs in the years ahead, others point to a number of mitigating circumstances, such as higher levels of income, education, and functional capacity among the elderly, that could soften the fiscal impact of an aging population. Regardless, the new face of our population will compel dramatic change. From accommodating the slower pace of older citizens in highway and pedestrian traffic to meeting an array of housing needs, from providing incentives for extended labor force participation to improving population health through increased attention to prevention and wellness, the challenge is to manage the attendant costs of an aging population while capturing its abundant promise.
As a prelude to our work, we surveyed Kentucky’s leading legislative and executive branch policymakers. Respondents were asked to choose 5 from a list of 17 prominently discussed aging issues and rank them “according to the importance you believe they will hold on the long-term public policy agenda.” Roughly a third of policymakers responded to the survey.
For our analysis of the responses, we simply weighted responses by assigning 5 points to those responses that were ranked the No. 1 priority, 4 to the No. 2 priority, etc. The top priorities of policymakers were:
1. Meeting the cost of health care for older citizens. Kentucky policymakers gave this top priority a 28 percent higher score than the closest—and closely related—second priority. Over the long term, the fiscal impact of growing health care consumption combined with the demographics of aging could seriously erode public resources. By the late 2020s, the Urban Institute predicts, expenditures for just three mandatory federal spending categories—publicly financed health care, Social Security, and interest on the debt—will devour virtually all projected revenues based on current tax rates.(1) At the state level, Medicaid expenditures, the majority of which go to meet the cost of nursing home care for older citizens who meet income guidelines, have risen precipitously over the past decade.
2. Enabling access to health care resources (e.g. prescription drugs, home health, dental and medical care.) A proposed expansion of Medicare, for which all citizens age 65 and older are eligible, to include the cost of drugs is now under consideration on Capitol Hill. Currently, Medicare covers neither drugs, which many of the elderly need to maintain their health, nor long-term care. On average, the elderly spend 19 percent of household income on health care expenses, but the burden for the poor is far higher. Those with incomes below the poverty level spend about 35 percent of their incomes on health care, according to the American Association for Retired Persons.
3. Strengthening the role of families in the care of dependent older citizens through enhanced support for respite care, adult day care, or alternative services.
4. Strengthening the role of families in the care of dependent older citizens through tax subsidies, or direct income for caregivers. Priorities 3 and 4 received nearly the same number of votes, indicating that policymakers believe families must play a stronger role in the care of elders and that some type of assistance to these families is critically important.
5. Developing an integrated system of long-term care. The nursing home population is projected to expand from 2.84 million in 2000 to 5.22 million in 2030, according to the American Council on Life Insurance. At the same time, total out-of-pocket expenses for older citizens and their families are predicted to grow from $33 billion to $158 billion. Through taxes, citizens shoulder much of the remaining cost. Today, Medicaid meets somewhere between 75 percent and 80 percent of the cost of long-term care in Kentucky, according to the Cabinet for Health Services.
1. C. Eugene Steuerle, Edward M. Gramlich, Hugh Heclo and Demetra Smith Nightingale, The Government We Deserve: Responsive Democracy and Changing Expectations (Washington, D.C.: The Urban Institute Press, 1998). Return to text.