Session Recap: How the Aging of the Population Will Affect Federal Spending on Older People
November 8, 2014 09:00 AM
By Liu Yi, Harvard University
Since aging become a globally problem for many countries, several studies focused on recent aging-related policy implications.
Differences in life expectancy by income and educational attainment have been growing in the United States in recent decades. Curious about how might growing difference in life expectancy across socioeconomic groups influence analysis of various social security policy option, Joyce Manchester from Vermont Legislative Joint Fiscal Office conducted research using the Congressional Budget Office’s (CBO) long-term model, based on administrative earnings data, which is a highly sophisticated tool for this purpose. They came with conclusion that higher or lower differential mortality would have consequences for distributed outcomes and system finance.
With the question of whether enrollment in private health insurance prior to age 65 affect expected Medicare spending or not, Jessica Banthin from the CBO presented research with policy implications showing that the ACA coverage expansions for the under-65 population may affect Medicare spending in the future years. Their research attempts to quantify the difference in expected Medicare spending by prior insurance status and state regulation of the nongroup market. They employed an IV approach to identify the effect of insurance status on expected Medicare spending.
Motivated that most distributional analysis of retirement savings looks at taxes and benefits in a cross-section, not over a lifetime, Karen Smith from The Urban Institute presented a paper directed at finding the joint progressivity of the social security and tax systems. Their study used the Urban Institute’s DYNASIM microsimulation model to measure the progressivity of the combined tax and benefit system based on the present discounted value of payroll taxes, Social Security benefits, and increased private retirement benefits attributable to the tax preferences for saving in qualified retirement plans. They examined outcomes under the combined system by income level, Social Security benefit type, marital status, race, education level, and cohort.
Discussant Martha Stinson from U.S. Census Bureau pointed out that Manchester’s paper was a vivid example of the huge gap between different groups of people. Moreover Martha gave suggestions to make future research more accessible to people who are not specialists in this area.