American Economic Review: Vol. 104 No. 5 (May 2014)

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The Growing Gap in Life Expectancy: Using the Future Elderly Model to Estimate Implications for Social Security and Medicare

Article Citation

Goldman, Dana P., and Peter R. Orszag. 2014. "The Growing Gap in Life Expectancy: Using the Future Elderly Model to Estimate Implications for Social Security and Medicare." American Economic Review, 104(5): 230-33.

DOI: 10.1257/aer.104.5.230

Abstract

Mortality gradients by education and income have been rising in the United States and elsewhere. However, their impact on Social Security progressivity has received relatively little attention, and the impact on Medicare has received effectively none. This paper uses the Future Elderly Model to estimate the effects of increased mortality gaps on the progressivity of Social Security and Medicare for those born between 1928 and 1990. It finds significant reductions in progressivity of both programs if current mortality trends persist and noticeable effects on total program costs. The effects are large enough to warrant more attention from both policy-makers and researchers.

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Authors

Goldman, Dana P. (Leonard D Schaeffer Center for Health Policy and Economics, U Southern CA)
Orszag, Peter R. (Citigroup Inc, New York, NY)

JEL Classifications

H55: Social Security and Public Pensions
I18: Health: Government Policy; Regulation; Public Health
J14: Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination


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