Demographic Paper

HCS/490
February 17, 2014
Professor David Dye, MPA

Introduction
The world is facing a situation without precedent: We soon will have more older people than children and more people at extreme old age than ever before. As both the proportion of older people and the length of life increase throughout the world, key questions arise. Will population aging be accompanied by a longer period of good health, a sustained sense of well-being, and extended periods of social engagement and productivity, or will it be associated with more illness, disability, and dependency? How will aging affect health care and social costs? Are these futures inevitable, or can we act to establish a physical and social infrastructure that might foster better health and wellbeing in older age? By 2050, the U.S. Census predicts that 19.6 million American workers will be 65 years or older, roughly 19 percent of the total U.S. workforce. In fact, the number of individuals in the labor force who are 65 years or older is expected to grow by 75 percent while the number of individuals in the workforce who are 25 to 54 is only expected to grow by 2 percent. By 2016, one-third of the total U.S. workforce will be 50 years or older — a group that may number 115 million by 2020 (Heidkamp, Mabe, & DeGraaf, 2012).

The Baby Boomers make up a significant portion of the U.S. population, and, as the Boomers age, the percentage of Americans over 65, those that utilize the bulk of health care resources, will shift significantly. When the last of the Boomers reach retirement age, almost 20 percent of the U.S. populations will be 65 or older compared to less than 13 percent today. By 2030, there will be more than 70 million Americans over age 65.
The dramatic increase in births between 1946 and 1964, dubbed the “baby boom,” drove many public services, particularly schools, to add capacity that wasn’t needed in the years immediately following. However, for health care, the situation is different. While this population will create a notable rise in demand for services, the demand will continue rather than drop off because everyone, including Boomers and the members of Generations X and Y that follow, is living longer and with more chronic diseases.
As Boomers age, the number with multiple chronic conditions is expected to grow from almost 8.6 million today (about one of every 10 Boomers) to almost 37 million in 2030. By 2030, more than 6 of every 10 Boomers will be managing more than one chronic condition.
According to Knickman & Snell (2002): The economic burden of aging in 2030 should be no greater than the economic burden associated with raising large numbers of baby boom children in the 1960s. The real challenges of caring for the elderly in 2030 will involve: (1) making sure society develops payment and insurance systems for long-term care that work better than existing ones, (2) taking advantage of advances in medicine and behavioral health to keep the elderly as healthy and active as possible, (3) changing the way society organizes community services so that care is more accessible, and (4) altering the cultural view of aging to make sure all ages are integrated into the fabric of community life.
Demographics are a major determinant of the size and characteristics of the future health workforce, and demographic trends can be extrapolated with reasonable accuracy one or two decades into the future. In addition to the growth in size of the U.S. population in future decades, three demographic trends have profound implications for the future health workforce:
First, the population is aging and the size of the elderly population will increase substantially. An aging population will place greater demands on the health care system at the same time that many health professionals will be retiring. Also, as the population ages there will be a continuing shift in the type and setting of services provided.
Second, the population is becoming more racially and ethnically diverse. Concerns that minorities are underrepresented in the health workforce have both equity implications for those who need health care services and efficiency implications for the health care system.
As minorities constitute a larger proportion of persons entering the workforce, the U.S. population will increasingly rely on minority health workers for their care.
Third, the population is shifting geographically and a significant portion of the U.S. population will continue to reside in areas with persistent shortages of health workers. These trends highlight the need for forecasting models that can make State-level and sub-State-level forecasts of health worker supply and demand. Boomers are more active than previous generations. Health care innovations from joint replacements to new pain medications have helped them live more active lives than their parents did at the same age. These innovations have translated into a decreasing percentage of Americans who are considered chronically disabled. As aging Boomers remain active longer, they will seek health care services that emphasize mobility and independence. Technologic advances will increase the health care options available to Boomers, both on their own and under the care of a physician, and medical advances will continue emerging at the same rapid pace seen over the last two decades. Boomers will constitute the largest group of patients with chronic conditions, and will benefit from new medicines, advances in monitoring equipment, innovations in surgical techniques and new drug delivery systems.
According to Berenson & Holahan (2010): The population over the age of 65 will be affected in a number of ways by the Patient Protection and Affordable Care Act (PPACA) even though the law is primarily aimed at non-elderly population. There will be increases in premiums for high-income people, cutbacks in the advantages some seniors gain from Medicare Advantage plans, and reductions in cost sharing in the prescription drug benefit and for preventive services. It is likely that the sustainable growth rate (SGR) formula will continue to be overridden periodically to head off major fee cuts but not permanently fixed. Therefore physician fees will continue to be adjusted upward by less than the inflation rate for medical practices. There will still be some additional efforts to increase primary care fees to encourage access in Medicare. But increased demand for services by the non-elderly who will become insured could potentially threaten access to care for seniors. Reductions in rates for other providers such as hospitals and nursing homes have been suggested by the Medicare Payment Advisory Commission (MedPAC) and the Congressional Budget Office (CBO) for several years and should not adversely affect access for Medicare beneficiaries, though having them in place for several years could lead to significant differences between private and Medicare rates. There are large numbers of provisions that introduce new payment and delivery system reforms that could either benefit or harm access to care for seniors.
Older Americans are disproportionately affected by chronic diseases and conditions, such as arthritis, diabetes and heart disease, as well as by disabilities that result from injuries such as falls. More than one-third of adults 65 or older fall each year. Twenty-one percent of the population age 60 and older – 10.3 million people – have diabetes. Seven of every 10 Americans who die each year, or more than 1.7 million people, die of a chronic disease. The need for programs that enable older adults to learn and practice healthy behaviors is critical. Billions of state dollars are spent on treating preventable diseases caused by smoking, obesity, and physical inactivity. Prevention could lower the incidence of these diseases and save money.
Older populations don’t necessarily equate to lower economic growth. Boosting productivity is the key to offsetting declining working-age populations. Without it, there will indeed be much lower growth but we’re hopeful that the seriousness of the issue will prompt real solutions to address productivity. For investors, aging demographics and resource constraints do mean the odds favor slower economic growth in the decades ahead. Yet these issues will also create some tremendous investment opportunities in areas such as biotechnology, robotics, agriculture, and renewable energy.

Conclusion
The Baby Boomers make up a significant portion of the U.S. population, and, as the Boomers age, the percentage of Americans over 65, those that utilize the bulk of health care resources, will shift significantly. When the last of the Boomers reach retirement age, almost 20 percent of the U.S. populations will be 65 or older compared to less than 13 percent today. By 2030, there will be more than 70 million Americans over age 65. As Boomers age, the number with multiple chronic conditions is expected to grow from almost 8.6 million today (about one of every 10 Boomers) to almost 37 million in 2030. By 2030, more than 6 of every 10 Boomers will be managing more than one chronic condition.
Older Americans are disproportionately affected by chronic diseases and conditions, such as arthritis, diabetes and heart disease, as well as by disabilities that result from injuries such as falls. Seven of every 10 Americans who die each year, or more than 1.7 million people, die of a chronic disease. The need for programs that enable older adults to learn and practice healthy behaviors is critical. Billions of state dollars are spent on treating preventable diseases caused by smoking, obesity, and physical inactivity. Prevention could lower the incidence of these diseases and save money.

References
Berenson, R., & Holahan, J. (2010). Timely analysis of immediate health policy issues. Retrieved from http://www.urban.org/UploadedPDF/412131-ppaca-seniors.pdf
Centers for Disease Control & Preventtion. (2007). The state of aging and health in America. Retrieved from http://www.cdc.gov/aging/pdf/saha_2007.pdf
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Knickman, J. R., & Snell, E. (2002, August). The 2030 problem: Caring for aging Baby Boomers. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1464018/
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