Aging: Public Policy
Abstract and Keywords
Public policy advances in the field of aging in the United States have lagged compared to the growth of the older adult population. Policy adjustments have been driven by ideological perspectives and have been largely incremental. In recent years, conservative policy makers have sought through various legislative vehicles to eliminate or curb entitlement programs, proposing private sector solutions and touting the importance of an “ownership society” in which individual citizens assume personal responsibility for their economic and health security. The election of a Democratic majority in the U.S. House and the slim margin of votes held by Democrats in the U.S. Senate may mean a shift in aging policy directions that strengthens Social Security, Medicare, and Medicaid, if the newly elected members are able to maintain their seats over time. The results of the 2008 presidential election will also determine how the social, economic, and other policy concerns will be addressed as the baby boomers join the ranks of older Americans.
Keywords: baby boomers, ideological perspectives, demographic variables, Social Security, Supplemental Security Income, Medicare, Medicaid, prescription drug benefit, Older Americans Act, long-term care, White House Conference on Aging, Mandate for Change, the Fair Minimum Wage Act of 2007, the Medicare Prescription Drug Price Negotiation Act of 2007, National Commission on Entitlement Solvency, Commission on Congressional Budgetary Accountability and Review of Federal Agencies, senior citizens
The aging of the U.S. population has been monitored and examined for decades in anticipation of 76 million baby boomers reaching age 65 between 2011 and 2029. Improved socioeconomic status, lifestyle choices, and advances in medical and drug interventions are expected to contribute in the years ahead to exceptional human longevity and an unprecedented number of centenarians and supercentenarians (persons 120 years of age and older). As a transformative demographic phenomenon, population aging in the United States, is generating policy issues and directions that reflect clearly defined ideological perspectives.
Demographics of Aging
Although the rate of the aging of the U.S. population has appeared to be dramatic, older persons in Japan, Italy, Germany, Sweden, Greece, Spain, and other developed nations constitute greater proportions of their nation's populations. As in other countries around the world, older women outnumber men in the United States. In 2003, there were 1.40 American older women for each older man aged 65 years and older. At age 85 and older, the sex ratio of women to men was significantly higher at 2.26:1 (U.S. DHHS, 2004).
Among all other demographic variables, the racial and ethnic diversity of its older adult population most distinguishes the United States from the vast majority of the world's countries. Of more than 36.3 million Americans 65 years of age and older in 2004, over 18% were minority elders. By 2020, almost 24% will be members of ethnic or racial minority groups, with this proportion rising by mid-21st century to more than 36% of all Americans aged 65 years and older.
Less than 10% (9.8%) of all older Americans had incomes at or below the poverty line in 2004. However, persons of color, women, and older persons who live alone tend to be poor more often than elderly white Americans, men, and older persons residing with their families. Elderly Americans in larger cities, the South, and rural communities are also more likely to be impoverished (U.S. DHHS, 2005).
Arguably, U.S. public policy advances have lagged since 1965, when Medicare, Medicaid, and the Older Americans programs were established through the amendment of the Social Security Act and the passage of the Older Americans Act. The velocity of growth in the older American population and the explosion of knowledge in the biomedical, social, and behavioral sciences that has illuminated economic security, health, and long-term care needs and resulted in the identification of numerous policy options for an aging America have not been followed with the adoption of major policies. Since 1974, national legislative gains have been largely incremental and have been inclined increasingly toward private sector solutions.
Social Security. The Social Security Act established the Federal Old-Age, Survivors and Disability Insurance Benefits (OASDI) Program (Title II) and the Supplementary Security Income for Aged, Blind, and Disabled Program (Title XVI). Earned Social Security retirement benefits are received by nearly 49 million beneficiaries or about 92% of persons aged 65 years and older. It is the only source of income for 20% of its beneficiaries, 41% of Hispanics, 40% of African Americans, 29% of single women, and 28% of Asian and Pacific Islanders who are older Americans (National Academy of Social Insurance, 2005). Means-tested Supplementary Security Income provides financial assistance to needy individuals aged 65 years and older, persons who are blind, or persons aged 18 years and older who are permanently and totally disabled (Sec. 1605. [42 U.S.C. 1385 note] (a)).
In 2008, the OASDI Trust fund had a surplus of $2 trillion. Benefits will be paid fully by the program through at least 2040, after which about 75% of all benefits owed will be covered (Social Security and Medicare Boards of Trustees of the Social Security and Medicare Trust Funds, 2006). The anticipated shortfall after 2040 has led to contentious debates over whether the market or a government-administered pay-as-you-go entitlement program should be the mechanism through which Americans ensure their economic security in old age.
Medicare. The Health Insurance for the Aged and Disabled Act amended the Social Security Act, establishing Title XVIII of the Social Security Act, the $384 billion (FY 2007) Medicare program. Lacking a comprehensive universal national health or long-term care policy, Medicare insures ∼95% of older Americans for hospital care and care by physicians as the nation's largest single payer for health services. Of Medicare's 37 million beneficiaries 65 years and older, 88% are enrolled in the traditional fee-for-services plan through which beneficiaries can seek care from health care providers of their choosing, while 12% have opted for the private-sector-run Medicare Advantage plan that requires that care be received from HMOs (health maintenance organizations), PPOs (preferred provider organizations), and other contracted providers. Unfortunately, not all of the 14.4 million eligible low-income older Americans are enrolled in the Medicare low-income (or “extra help”) subsidy program that was established as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to reduce the cost of prescription drugs (Center for Medicare Advocacy, Inc., 2005).
Compared with the Old-Age and Survivors Insurance (Social Security) Trust Fund, the Hospital Insurance (Medicare) Trust Fund is significantly less robust. (A Disability Insurance Trust Fund covers disability benefits.) Medicare Trustees reported in 2006 that the Hospital Insurance Program (Part A) fund reserves will begin to draw down in 2010 and will be depleted by 2018, when program income will cover 80% of anticipated expenditures. The Supplementary Medical Insurance Program (Part B), underwritten in part by the Supplementary Medical Insurance Trust Fund (also for Part D), will need to be sustained by higher premiums and well-timed appropriations.
Reductions in the number of beneficiaries, the cost to the federal government, and the total cost per beneficiary are the three most commonly named options for resolving Medicare's overall financial shortfalls (Congressional Budget Office, 2005). The adoption of a pay-for-performance approach by the Centers for Medicare and Medicaid Services has also been urged by the Institute of Medicine to incentivize health-care providers to achieve health-care quality targets, that is, safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity (2007).
The financial vulnerability of Medicare Parts A and B is not the program's only conundrum. The Voluntary Prescription Drug Benefit Program (Part D), enacted in 2003, inadequately covers beneficiaries, some of whom have seen drug costs triple from 1992 to 2002 (Federal Interagency Forum on Aging-Related Statistics, 2006). A program rule related to true out-of-pocket costs has caused many beneficiaries to pay monthly Medicare premiums on top of the full cost of medications not covered by Part D. Such gaps in coverage equal an estimated $2,850 per beneficiary and are expected to rise by 2013 to $5,063 with inflation indexed benefit thresholds (Congressional Budget Office, 2005). Beneficiaries enrolled in Part D are purportedly overwhelmed and confused by the number of private health plans from which they must choose. (In California, there are nearly 140 health plan choices.)
Other dilemmas include Medicare's acute care bias, although chronic diseases account for six of seven leading causes of death among persons aged 65 years and older. Eighty percent of older Americans have at least one chronic condition, and half of all persons aged 65 years and older have at least two chronic conditions (Centers for Disease Control and Prevention and the Merck Company Foundation, 2007).
Long-Term Care. Older persons are receiving long-term care primarily from family caregivers. Only 5% of older Americans are nursing home residents. Nationwide, 49% of nursing home care costs for low-income older persons are assumed by Medicaid, a $300 billion (FY2006) program established in 1965 via Title XIX of the Social Security Act, the Grants to the States for Medical Assistance (Medicaid) Program. Out-of-pocket long-term care expenditures equal 19%, Medicare reimbursements for postacute services amount to 19%, and private long-term care insurance contributes 7% of nursing home reimbursements. Federal Medicaid grants to states (57%) are matched with state dollars (43%) to finance care for 56 million low-income Americans. These expenditures represent states' fastest growing costs.
The Federal government's Centers for Medicare and Medicaid Services grant Medicaid waivers to states from institutional care rules for the demonstration of innovative reimbursed service models. In effect, these waivers have generated more than 50 different state Medicaid programs. Title XX, Block Grants to the States, provides additional funds for home and community-based services that can help prevent or reduce inappropriate institutional care.
The Administration on Aging administers the OAA National Family Caregiver Support Program (enacted in November 2000), the Nutrition Services Program, and the National Long Term Care Ombudsman Program. Discretionary federal and state matching dollars fund these and other OAA programs.
The need to finance long-term care, effectively coordinate health and long-term care dollars, create a better balance of home and community-based services, and assure the availability and competency of long-term care professionals and paraprofessionals are among the most urgent aging policy concerns. Long-term care costs vary from community to community by type of care. In 2006, the average cost of care in a private nursing home room was $75,190 nationwide (MetLife Mature Market Institute, 2006). Most older adults prefer community-based or in-home care, but there is an inadequate supply of these services and of the professionals and paraprofessionals required to staff both institutional and noninstitutional long-term care programs. A study by the Office of the Assistant Secretary for Planning and Evaluation in the U.S. DHHS estimated that ∼110,000 professional social workers will be needed by 2050 to help deliver long-term care services (U.S. DHHS, 2006).
Ideological and Interest Group Perspectives
There are sharply polarized, ideologically based views on the policies necessary to address the economic security, health, and long-term care needs of our aging nation. The conservative Mandate for Change has served as the Bush Administration's blueprint for policy and organizational transformation. Guided by ideological and religious convictions, the Bush Administration has sought to uproot government safety net and entitlement programs instituted by liberal policy makers, striving to privatize public programs and reduce the structure and size of the Executive Branch, while growing the Department of Defense's budget (Gonyea, 2005).
In a policy environment populated by special interest lobbyists, the aging, health care, long-term care, drug, insurance, financial, and other industries, along with large and small membership associations, advocacy groups, and defense-associated think tanks and groups, have been keenly aware of the implications of population aging. Conservatives such as Petersen have argued that an aging society will siphon off resources needed to finance a strong national defense (Petersen, 1999). Some have warned that the nation's leadership position in the emerging global economy and our standard of living will be eroded by unbridled expenditures tied to an aging America (Committee for Economic Development, 2003). Reflecting their conservative roots, the White House and Republican members of Congress have touted the need for an “ownership society” in which individual responsibility is a cornerstone. Citizens in an ownership society should acquire individual private health insurance plans and savings accounts to secure their retirement.
In contrast, liberal organizations such as the National Committee to Preserve Social Security and Medicare, OWL (previously the Older Women's League), and Families USA have maintained that the nation's social insurance and entitlement programs are fundamentally sound and keep vulnerable Americans, most prominently older women and minorities, out of the jaws of poverty and illness (National Committee to Preserve Social Security and Medicare, 2001). They have also pointed out that government-run social insurance programs incur significantly lower administrative costs in total and are less likely to inflate the federal deficit. Liberals have asserted that the market cannot ensure reliable investment returns and would thus place retirees at risk (National Committee to Preserve Social Security and Medicare, 2001).
In December 2005, President George W. Bush became the first U.S. President to have refused to attend a White House Conference on Aging (WHCOA). Also unprecedented were the management of substantive content and the structure and processes approved for the conference by its presidentially appointed organizers (Gonyea, 2005). Many delegates interpreted the President's absence as a dismissal of their concerns. Instead of older Americans, family caregivers, and service providers, the Conference featured private industry representatives who lauded the promise of technology to enable self-reliance and personal responsibility in the advanced years. Conference officials also refused to accept evidence-based white papers prepared by experts and minority reports and petitions from the delegates.
Consistent with its ideological orientation, the Bush Administration, as of 2007, remained resolute in its intention to privatize Social Security and Medicare. A plan to substantially reduce Social Security benefits for the middle- and higher-income Americans who will account for more than 70% of future retirees has been supported by the White House. The White House has called for private accounts funded by diverting 4% of Social Security payroll taxes, a course that would accelerate the Social Security Trust Fund shortfall by 6 years. At least one analysis has estimated that such private accounts would result in an additional $5 trillion national liability, nearly doubling the national debt within two decades. Ironically, instituting private accounts would also require cuts to Social Security benefits (Fuhrman & Greenstein, 2006; National Academy of Social Insurance, 2005).
Spurred on by the 2006 congressional races, senators and members of Congress reauthorized the OAA in 2006 (Pub. L No. 109–365). To the Act were added provisions that expand the already stretched National Family Caregiver Support Program to include access to caregiver support services to more grandparent caregivers, all caregivers of persons with Alzheimer's disease, and older parents of children with disabling conditions. The amended Act also called upon the Secretary of Health and Human Services to engage in planning and instituting coordinated, comprehensive systems that will honor better the preference of older Americans to be served in their homes and communities. Unfortunately, the newly expanded OAA programs and services remain seriously underfunded given the growing needs.
During the 109th and 110th Congresses, several Senate and House bills were introduced by Republican members who sought to eliminate and realign Executive Branch agencies and entitlement programs. These bills called for the establishment of a National Commission on Entitlement Solvency (to focus on Social Security, Medicare, and Medicaid) and a Commission on Congressional Budgetary Accountability and Review of Federal Agencies. Modeled after the military Base Closure and Realignment Commission, both commissions were to be authorized to advance recommendations with little public notice or debate and with few opportunities for amendments. Advocates for the aging feared that, if established, the commissions would hasten the privatization of Social Security and Medicare programs, dramatically restructure Medicaid, and eliminate units in the Social Security Administration and the Department of Health and Human Services (Brass, 2006). Although introduced, none of the bills moved beyond a second reading.
The Fair Minimum Wage Act of 2007 (Pub. L. No. 110–28, Title VIII), and the Medicare Prescription Drug Price Negotiation Act of 2007, introduced by Democrats, with are two measures direct implications for older Americans. The Fair Minimum Wage Act was signed into law on May 25, 2007, as a part of the 2007 U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act. It raises the federal minimum wage from $5.15 per hour to $7.25 per hour in three increments over a 2 years and 2 month period. For all Americans who work to sustain their families and themselves, the wage increase is a step toward ensuring a living wage. Opposed by the pharmaceutical industry and many conservatives, the Medicare Prescription Drug Price Negotiation Act of 2007 (H.R. 4, S. 3) passed the House, but failed to receive the two-thirds majority needed in the Senate. The President clearly indicated that he would have vetoed the measure had it been presented to him for enactment. Enacted, the Act would have amended Part D of Title XVIII [section 1860D-11(i)], the “noninterference” provision of the Social Security Act, and required the Secretary of Health and Human Services to negotiate with drug manufacturers on behalf of Medicare beneficiaries to lower and make more affordable covered drug prices. Existing provisions now prohibit the Secretary of Health and Human Services from participating in the negotiations between drug manufacturers, pharmacies, and sponsors of prescription drug plans (PDPs) involved in Part D of Medicare, or from requiring a particular formulary or price structure for covered Part D drugs. Unfortunately, the failure of this Act to become law means that there is one less provision to assure that prescription drug prices will be contained.
The election in 2006 of 232 Democrats and 203 Republicans to the U.S. House of Representatives and of 51 Democrats to the U.S. Senate transferred the reins of power in both Houses to the Democrats. However, the Presidential and Congressional elections in 2008 will most likely determine whether legislative proposals calling for real income and health security will be reasonable possibilities for current and future older Americans and their family caregivers. A powerful array of interest groups, including the Business Roundtable, the SEIU (Service Employees International Union) with its membership exceeding a million workers, and AARP with a membership of more than 38 million persons 50 years of age and older, have joined together to make national health-care reform a deciding issue by which the United States' electorate can select its political leaders, in particular the President of the United States in 2008 (http://www.aarp.org/issues/dividedwefail/). Meanwhile, the National Commission for Quality Long Term Care, which includes a range of members from the public and private sectors, and the national aging organizations that belong to the Leadership Council of Aging Organizations are independently calling for long-term care to be a priority item on the national policy agenda (Leadership Council of Aging Organizations, 2007; National Commission for Long Term Care Quality, 2007). What remains to be seen is whether efforts to develop comprehensive national health and long-term care policies, in combination or as separate entities, will be placed at the top of the domestic agenda and will sufficiently address the complex needs of a diverse aging population. A narrow window of opportunity is available before the baby boomers reach 65 years of age. Insufficient lead time to amass the necessary financial resources and develop the essential workforce to adequately serve a growing aging population may constrain ambitious policy expectations.
The ultimate test of the efficacy of extant and yet-to-be proposed aging policies may be whether the overall well-being and security of women and racial-ethnic minorities are truly assured as outcomes. Single older African American and Hispanic women who live alone have consistently registered the highest poverty rates among all older Americans (U.S. DHHS, 2005). Already Munnell (2006) warns that boomer women may net less in retirement income than their mothers. If aging policies can be promulgated to provide all women, irrespective of race and ethnicity, with income, health, and long-term care security, all women and men may have a reasonable opportunity to achieve not just long life, but also a good life in their later years.
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