Eugene Steuerle's slides from the Center for Health Journalism webinar "Will the Silver Tsunami Send Medicare into the Red?" 12.17.15 http://www.centerforhealthjournalism.org/content/will-silver-tsunami-send-medicare-red

1. Medicare as Health Care Flagship
Eugene Steuerle, Richard B. Fisher Chair & Institute Fellow, Urban Institute
blog.governmentwedeserve.org | deadmenruling.com
Presentation for Center for Health Journalism: “Will the Silver Tsunami Send Medicare
into the Red?”
December 16, 2015

2. Pressures Related to Medicare
Health costs:
Prices in a non-competitive sector
Quantities in a technologically advanced sector
Automatic growth without new legislation
Aging of population:
“Faux aging”: living longer but not working longer
True aging: decline in the birth rate & population labor force participation,
Budget:
Medicare Part A imbalances
Total Medicare cost = demand on revenues from som whatever the source
Squeeze:
On other government programs
On other personal income

3. Health Spending as a Share of per Capita GDP Growth
19.1%
27.6%
31.1%
1965-1985 1985-2005 2005-2020
Source: CMS National Health Expenditure data. GDP data from CBO and Federal Reserve Economic Data.
Health Costs consuming nearly one-third of per
capita income growth

4. Increasing years of support
0
5
10
15
20
25
30
35
1965 1975 1985 1995 2005 2015 2025 2035 2045 2055 2065
Expected Years of Benefits for a Couple at Age 65
At least one spouse living
Source: Urban Institute. 2015. Calculations from actuarial tables provided by the Social Security Administration.

5. Ever more generous retirement
269,000
487,000
185,000
616,000 543,000
731,000 655,000
962,000
813,000
39,000
156,000
18,000
422,000
140,000
621,000
179,000
965,000
227,000
308,000
37,000
643,000
203,000
1,038,000
683,000
1,352,000
834,000
1,927,000
1,040,000
Benefits Taxes Benefits Taxes Benefits Taxes Benefits Taxes Benefits Taxes
1960 1980 2015 2030 2050
Year Couple Turns 65
Social Security Medicare
Married couple earning the average wage ($49,000 in 2015)
Present Value of Lifetime Social Security and Medicare Benefits and Taxes at Age
Source: C. E. Steuerle and C. Quakenbush, Urban Institute, 2015. Based on earlier work with Adam Carasso and Stephanie Rennane.
Calculations based on data from Social Security and CMS trustees.
Notes: Totals are expected present values adjusted for mortality at age 65 and assume a constant 2 percent real discount rate.
(Age 50 in 2015) (Age 30 in 2015)
2015 dollars

6. Expected Medicare benefits comprise a large share
of lifetime benefits.
39,000
-
156,000
18,000
422,000
140,000
621,000
179,000
965,000
227,000
Benefits Taxes Benefits Taxes Benefits Taxes Benefits Taxes Benefits Taxes
1960 1980 2015 2030 2050
Year Couple Turns 65 (Age 50 in 2015) (Age 30 in 2015)
2015 dollars
Source: C. E. Steuerle and C. Quakenbush, Urban Institute, 2015. Based on earlier work with Adam Carasso and Stephanie Rennane.
Lifetime benefits are net of premiums. Calculations based on data from Social Security and CMS trustees.
Notes: Totals are expected present values adjusted for mortality at age 65 and assume a constant 2 percent real discount rate.
Present Value of Lifetime Medicare Benefits and Taxes at Age 65
Married couple earning the average wage ($49,000 in 2015)

7. Declining rates of fertility
(begins about 1965, starts playing out in Medicare about 2010)
0
0.5
1
1.5
2
2.5
3
3.5
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: Center for Disease Control data compiled by the World Bank
Notes: The total fertility rate estimates the number of births that a hypothetical group of 1,000 women would have over their
lifetimes, based on the age-specific birth rates in a given year.
Total Fertility Rate in the United States

8. Greater burdens placed on fewer shoulders
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1966 1976 1986 1996 2006 2016 2026 2036 2046 2056
Medicare Covered Workers per Medicare Beneficiary
Source: Supplemental data from Medicare 2015 Trustees Report.

9. Widening gap in financing
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 2031 2036 2041 2046 2051 2056
Expenditures
Income Excluding
Interest and General
Fund Transfers
Medicare Costs and Income Excluding Interest and General Fund
Transfers
Source: Supplemental data from Medicare 2015 Trustees Report. Expenditures assume CMS “illustrative alternative”
scenario.
Percentage of GDP

10. Health and retirement expenditures dominate growth
in spending over the next decade.
-2%
2%
10%
30%
59%
Defense
Children
All other outlays
Interest on the debt
Social Security, Medicare, and Medicaid
Source: Urban Institute. Kids’ Share 2015: Report on Federal Expenditures on Children through 2014.
Share of Projected Growth in Federal Outlays from 2014 to 2025 by Major
Budgetary Category

11. For reporters: terms that confuse
• Aging : different responses required for longer lives and drop in birth rates
• Costs: price and quantity (partly due to technology) pressures not the same
• Change: focus on new legislation obscures the major, automatic, change from the past
• Employment: employment rate, not unemployment rate, drives growth & revenues
• Insolvency? 44% of Medicare costs already financed by general revenues & deficits
• Winners and losers: when one share goes up, another must go down

12. Find out more
www.deadmenruling.com
blog.governmentwedeserve.org