Demographic Tidal Waves Will Make A Deep Impact

by Bob O’Toole, President Informed Eldercare Decisions, Inc.

For several months now, Americans have been confronted with some of the most severe weather in recorded history -- torrential rains and flooding from coast to coast, tornadoes and severe electrical storms even in places where these storms rarely occur, to the severe drought and raging fires that caused the devastation of millions of acres in Florida. There’s more too, we’re told. Meteorologists say we could still be in for one of the worst hurricane seasons on record.

If the daily news and weather reports aren’t enough to scare us out of our wits, a visit to our local movie theater this summer offered a vision of even greater disaster. Two of the top grossing films this summer "Deep Impact" and "Armageddon", both provide us with the mother of all meteorological events -- a huge meteor actually colliding with planet earth creating tidal waves and general mass destruction that made the effects of El Nino and his sister, La Nina, look harmless by comparison.

While we’ve been preoccupied with the harsh impact of our weather patterns, (and the storm system that has engulfed the U.S. President), we seem to be ignoring the fact that mother nature has created another phenomenon for which we are quite unprepared -- an aging society.

It seems that we are just beginning to become aware of our new longevity. Commercial messages for "silver" vitamins, hair transplants, drugs to revive sexual potency, and the burgeoning construction of retirement communities across the country are hard to ignore. The graying of America has even caught the attention of our elected officials who have adopted a variety of measures to prevent the costs of Medicare and Medicaid from getting out of control.

What few people seem to acknowledge, however, is that the size and impact of our rapidly aging nation is of tidal wave proportions. We are about as well prepared to cope with this tidal wave as we are to deal with a giant meteor colliding with earth.

The "graying of America" is not a gradual phenomenon. In less than one century the number of those likely to live beyond age 65 has grown from 1 in 10 in 1900 to 8 in 10 today. While this is in many ways wonderful news, the pressures on our health care system, our family resources, and our overall economy are truly enormous.

What is troubling about our casual attitude about the proliferating impact of our aging society is that we have not one, but two, tidal waves coming. We can see them clearly on the horizon, yet our preparation for their impact is the equivalent of filling a few sandbags to prevent any minor flooding.

The first tidal wave is cresting now with the unprecedented number of people in their 80’s and 90’s. Currently people age 85 and older are almost six times more likely to need chronic, ongoing health and social services than those in their 60’s.

This currently cresting demographic wave is already taxing the resources we have in place to meet the demand.

Medicaid, the joint Federal and State funded health program for the poor, is now the largest and fastest growing segment of most State budgets. While originally designed as a poverty program, the largest portion of Medicaid budgets pay for nursing home bills for both the poor and the middle class who are ill prepared for the staggering costs of care. Most become impoverished, often after only a year of long term health care.

The other major government health care program for frail older people is the Medicare program. Virtually everyone over 65 is eligible for Medicare and for many years the Medicare program paid for a growing share of long term care costs. Congress discovered last year that the amount Medicare was paying for long term health care costs at home was growing at a rapid rate, one that would bankrupt the Medicare Trust Fund in less than 3 years.

To prevent a fiscal meltdown in the Medicare budget, Congress enacted deep cuts last year and placed strict caps on home health care expenses. The results of these cuts have been devastating to many agencies that serve home-bound elders. Visiting nurse agencies, some of which have been in business since the turn of the century, have started closing their doors. Those that survive the massive shakeout in the home health industry will be required to serve those who can pay for much of their care with personal funds, or go out of business too.

The response, so far, to this first tidal wave has been to meet the growing demand for long term health care by reducing the amount of care available or in keeping with our meteorological metaphor -- as the water rises, the supply of sandbags is reduced. If their aging parents are to receive the care they need, they’ll have to rely increasingly on their baby boomer offspring to help them pay the bills.

While the aging tidal wave that is now cresting will have a devastating effect, the second "graying wave" is clearly visible on the horizon. It will make the first wave look like only a ripple in comparison. This is because life expectancy is expected to continue to increase in the 21st Century. The baby boomers are likely to live longer than their parents. There are 76 million adults who were born during the post war years of 1946 to 1964. The young and the restless of the 1960’s are turning 50 -- at a rate of 1 every 7 seconds -- for the next twenty years. Add the aging boomers to their long living parents and you have an 85+ population that will grow by nearly 150% by the year 2030.

While medical progress and healthier lifestyles may reduce the percentage of those who suffer from debilitating illness in their 70’s and 80’s, the overall demand placed on the long term health care system in the U.S. will outweigh anything our society has ever seen. Most of us are totally unprepared for this "aging Armageddon."

"Aging Armageddon"? Isn’t this a bit of an overstatement? Hysterical hyperbole? Let’s look at the numbers.

In 1998, a person with a disabling illness who receives their care at home can expect to pay anywhere from $10 to $25 per hour for the care of a home health aide. Costs vary widely across the country, but the ranges from about $20,000-25,000 a year in the South and Midwest to $38,000-40,000 annually for home care in the Northeast and on the West Coast. A year of nursing home care in states like New York, Massachusetts, New Jersey and Connecticut now run in the vicinity of $70,000 to $85,000 for a semi-private room. A private room will cost you more.

If the current cost trends continue, baby boomers will be facing annual long term care costs exceeding $150,000 annually by the time they reach their late 60’s. Those costs are likely to double when that generation reaches their 80’s -- that's less than 30 years from now.

The enormity of the economic and social impact of long term health care is so great that rather than face it now and put some plans in place to meet this crisis, the response by most boomers is to simply ignore it.

They dismiss it with a cavalier "if it happens to me, I’ll call someone like "Dr. Kevorkian", or they naively assume that "somehow the government will find a way to pay for my care."

The reality, of course, is that government programs currently serving the elderly are severely strained trying to cope with the current unexpected "age wave". The only way for these programs to meet the long term health care needs of the baby boomers will be to raise taxes -- steeply and soon.

While current resources are becoming exhausted while meeting the long term care needs of those now in their 80’s, the funds used for this purpose come largely from the pay checks of baby boomers. The taxes baby boomers pay currently are not being saved for their old age. These tax revenues are being used now to pay, at least in part, for their parents' care.

Whether out of selfishness, practical considerations or concerns about unsustainable population growth, the baby boomers themselves had fewer children than their parents. Today, in fact, the average baby boomer couple has more parents than children. Be it a Baptism or a Bris, have you noticed there’s not only plenty of grandparents in attendance but an increasing number of great grandparents. So, when the huge second tidal wave of aging baby boomers gets old, there will be many fewer younger adults to man the sandbags.

Peter Peterson, a former U. S. Secretary of Commerce and co-chairman of the fiscal watchdog group Concord Coalition, just to maintain the current level of services provided to their aging parents, the children of aging boomers will have to pay an estimated 50-60% of their income in taxes. There will be nothing left for other national priorities such as education, defense, or environmental cleanup.

As for expecting their offspring to provide some of the care they’ll need, the ability of one or two adult children to provide care for their aging parents, grandparents and in-laws will require a super-human effort and very devoted children. The physical and emotional demands of caring for someone with complex multiple chronic conditions can be exhausting. Even assuming that selfless and superhuman efforts of their adult children will provide care for aging baby boomer parents -- 26% of boomers were childless in 1990. A very substantial number of frail elders will simply be alone by the second quarter of the next century.

In keeping with our meteorological metaphor, it seems that -- like the weather -- there’s a lot of talk about the decline of long term health care services, but no one is doing anything about it.