There is an informative and thoughtful article in today's Washington Post by Lori Montgomery on the current and future cost growth of Medicare.
The key facts are in the graph to the right. On the left is an orange bar graph with the good news: per capita Medicare spending has been falling recently. The line graph in the center is the bad news: Medicare enrollment is increasing, and it is increasing rapidly as we baby boomers retire. The net effect, on the far right, is a projected continuing increase in Medicare costs.
But my friend David States pointed out to me that we might look more closely at the projected growth in Medicare enrollment. To the right are data on the proportion of the US population that is 65 or older, with projections into the future (taken from the CDC). My graph is covering most of the same period as Montgomery's. But perhaps because she uses a different projection, or simply because I am plotting more points, it has a different shape. Notice first the rapid increase in this proportion as the Baby Boom retires. This is what will drive the expansion of Medicare costs, even if cost / retiree is stable. After 2030, however, the rate of growth of the elderly as a percentage of total population slows and then stops. As the CDC authors note:
...when the last Baby Boomers enter the ranks of the older population and the ﬁrst Baby Boomer cohort enters the oldest old age categories, the proportion aged 65 and older will be relatively stable at around 20 percent.
This will happen because the baby boom was followed by falling birthrates (the "baby bust").
Let's not count on this, because long-term demographic projections are often wrong. Moreover, the percentage of very old (and very expensive) persons within the elderly may continue to increase. But suppose, for the moment, that the CDC is right.
There may be a ray of hope here. We need to find ways to hold down the growth of per capita Medicare spending, We need to do this by transforming care to make it more cost-effective. But if* we can find a way to control the growth in spending per retiree, and demographic pressure ends, we will have solved the problem of growth in Medicare cost.
*This is, as they say, a big IF.