+Government Funded Benefit Programs

Understanding the Sustainability of Government Benefit Programs in an Aging Society

+Demographic Shift in Social Security:

+The Numbers on Social Security:

  For the first time in history the Social Security Insurance Co. will run a deficit in 2010

  The Social Security Board of Trustees predicts that the trust fund will be exhausted in 2041.

  Only 73% of outlays will be covered by incoming receipts at the point of exhaustion assuming current trends continue.

  By 2025 the number of people aged 65 and over is predicted to grow 74%. During the same period the number of workers supporting the system will grow 14%.

+Social Security in the Short Term:

  Anticipated 2010 Social Security Expenditures: $709 Billion

  Social Security derives revenues from three sources:   Payroll taxes levied on covered earnings

  Earmarked income taxes levied on benefits (2010: $22 Billion)

  Interest earnings on reserves (2010: $120 Billion)

  Total projected 2010 revenue: $642 Billion

  The CBO believed the surplus would be $91 Billion instead of the Trustees projected $138 billion.

  In reality there will be a deficit in 2010.

+In the Long Run…

Social Security and Medicare Cost as a Percentage of GDP

+Demographic Shift in Medicare:

+The Numbers on Medicare:   Medicare accounted for 20% of U.S. healthcare expenditures

in 2008

  The are currently nearly 45 million beneficiaries

  The Medicare Part A Trust Fund, which covers hospital and other health facility services that are utilized by Medicare beneficiaries and is financed by an ear- marked payroll tax, is projected to become insolvent by 2017 under current law.1

1) The Boards of Trustees, 2009 Annual Report (Wash., D.C.: Federal Hospital Insurance and Federal Supplementary Insurance Trust Funds, May 12, 2009).

+The Problem with Medicare:

+Medicaid Demography

+The numbers on Medicaid:

  National 2009 Enrollment: 58,106,000 (19% of population)

  Total Expenditures: $338,791,482,443

  Growth in Medicaid Costs 04 – 07: 3.6%

  The Elderly make up ~10% of the enrollment but account for 28 % of the costs

+Comparative Analysis:

New York’s per Capita Medicaid Spending Compared to Other Large States

+A Snapshot of all 3 Programs:

+Critical Questions:

  How can existing benefit programs be restructured to meet the needs of an ever increasing number of beneficiaries?

  What actions need to be taken immediately in order to avert uncontrolled deficit growth?

  How do we craft social safety nets that are comprehensive, fair, and affordable?

+Policy Options for Medicare and Medicaid :   Crack down on fraud and abuse

  Develop a healthy workforce

  Coordinate care through family doctors

  Make health a community effort

  Stop hospital infections

+Policy Options for Medicare and Medicaid:

  Get patients to take their medicines

  Discuss options near end of life

  Use insurance to manage chronic disease

  Let well informed patients decide

  Apologize to the patient

+Policy Options for Social Security:

  Increase Retirement Age

  Increase Payroll Tax Rates

  Investment of Trust Fund Assets in Stocks

  Mandate Individual Retirement Accounts

+Policy Options for Social Security:

  Sharply Reduce Benefits for Recipients whose income crosses a certain Threshold

  Tax Social Security Benefits like a Private Pension

  Increase the Number of Years to Determine Benefit

  Reduce the COLA (Cost of Living Adjustment)

  Reduce Benefits

  Increase Amount of Earnings Subject to Payroll Tax

+Advocacy Issues:

  Government funded benefit programs serve many purposes. They are essential lifelines for many Americans. When considering cost containment it is important to keep in perspective the dignity, safety, and health of millions of Americans.

  Social security erodes private saving capacity. This should be a concern for young citizens who feel they could manage their funds in a more effective fashion. Young workers deserve the right to chose their own retirement saving strategy.

+Conclusion:   Current government benefit program expenditure levels are

unsustainable given current demographic shifts.

  Action needs to be taken as soon as possible in order to avert financial crisis.

  States do not spend equally or equitably when it comes to benefit programs.

  The costs of aging permeate every sector of benefit program expenditures.

+Want to Know More:

The A. Alfred Taubman Center at Brown offers full courses taught by private and public sector experts associated with the As America Ages Project. For a full listing of events, courses, and recent research please visit:

http://www.brown.edu/Project/As_America_Ages/

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