Aging: Issues and economic trends for the 1980s

Significant changes are taking place within the age structure of the American population. Persons aged 65 and older represented 11.2% of the population in 1980. By 1990, it is estimated they will increase to 12.2% of the population. The proportion of the 65-and-over population is expected to rise rapidly as the post-World War II babies reach age 65, peaking at about 18.3% in the year 2030. Changes also are taking place within the age structure of the 65-and-over group. Between 1980 and the year 2000, it is anticipated that the fastest growing group of older people will be the cohort aged 85 and over, followed by the 75- to 84-year-old cohort. The proportional growth of the aging population is expected to be largely offset by the decline in the under-18 segment of the population. Even considering the likelihood that the general health of older Americans will continue to improve, the expansion of an aging population - particularly the increase among those 75 and over - will translate into greatly increased demand for health care services, especially for expensive long-term care services. Also, a far smaller proportion of the cost of an elderly dependent is borne directly by the family than is that of a young dependent. Consequently, government expenditures are greater per elderly dependent than per young dependent. Thus, the growth of the aging population may translate into a heavier tax burden on the working population, which will only be somewhat lightened by the decline in government expenses directed at the young. The aging of the U.S. population, combined with increased effort to limit the growth of government spending, will heighten the debate over the nature of the appropriate policies to be followed in the 1980s. To aid in the development of policy options in the economics of aging, the material presented in this paper was prepared for the 1981 White House Conference on Aging. The purpose of our effort was to provide an information base and to raise some significant issues, rather than to suggest solutions. The paper begins with an overview of major economic trends and their impact on government programs affecting the elderly. We then raise issues relating to income support programs, retirement trends, and health care for the elderly.