Study: Longevity gains raise Social Security costs more than Medicare
6 reported
A new working paper from the National Bureau of Economic Research (NBER) examines how declining mortality and morbidity among the elderly have affected the relative finances of Social Security and Medicare. Using nearly three decades of Medicare Current Beneficiary Survey data from 1992 to 2019, the authors estimate that demographic changes raised expected lifetime Social Security spending by 14%, compared to a 6% increase for Medicare. The slower growth in health care spending is attributed to the fact that the additional 2.4 years of remaining life expectancy were entirely healthy, while expected time with severe health limitations fell by about 30%. The paper also presents a stylized life-cycle model to explore optimal allocation of public funds between the two programs. The source article notes that the author of the blog post wishes to switch resources from Medicare to Social Security, or give individuals the option to do so.
What’s reported
The study uses Medicare Current Beneficiary Survey data from 1992 to 2019.
Expected lifetime Social Security spending rose 14% due to demographic changes.
Expected lifetime Medicare spending rose 6% due to the same changes.
The additional 2.4 years of remaining life expectancy were entirely healthy, free of physical or cognitive limitations.
Expected time with severe health limitations fell by about 30%, reducing expected nursing-home and home-health use.
The paper is an NBER working paper by Liran Einav and Amy Finkelstein.
Key figures
Liran Einav, co-author of the NBER working paper
Amy Finkelstein, co-author of the NBER working paper
Sources: marginalrevolution.com
