The Golden Age of Aging and its Discontents

Abstract:     
This paper, an expanded version of the Ann F. Baum Lecture in Elderlaw at the University of Illinois School of Law, uses the Medicare funding crisis to explore a number of topics that we must carefully analyze if we are to figure out how to contain it. The paper has seven parts. First, I describe what I call “the golden age of aging” - the vastly improved social, physical, and economic conditions and prospects of the elderly population. Second, I explain how the public programs that have helped secure this golden age may be at future risk due primarily to the changing ratio of dependents (elderly and children) to the working population. Third, I explore the political economy of aging, in which the elderly possess large and growing advantages in protecting their interests politically, which include resisting the difficult reforms that are necessary to make age-related programs fiscally sustainable. Fourth, drawing on earlier work with Richard Zeckhauser (Targeting in Social Programs: Avoiding Bad Bets, Removing Bad Apples (Brookings, 2006)), I argue that policymakers must reduce their propensity to use scarce programmatic resources to make "bad bets," many of which involve excessive health care spending on the elderly at the expense of other, more cost-effective social needs, especially those of children. Fifth, I analyze some of the hard normative and policy choices that such a cost-effectiveness strategy would entail. Sixth, I explore the issue of inter-generational equity, arguing that the current generation of workers-taxpayers has more than satisfied any moral obligations it owes to current retirees. Finally, I conclude by recommending some of the policy approaches that flow from my analysis. These include informing patients more candidly about the cost-effectiveness of possible treatments and care modalities; encouraging pre-illness advance directives; guiding physicians' decisions on bad bets; increasing research on the cost-effectiveness of particular interventions; and changing certain reimbursement practices.

Number of Pages in PDF File: 31

Accepted Paper Series