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Re-Thinking Old Age: In the National Interest

Author: Michael W. Hodin, Adjunct Senior Fellow
March 24, 2012
Huffington Post

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There's a chance convergence this week inside the Beltway. On Capitol Hill, the budget debate enters a new act as Ryan's proposal draws both applause and guffaws. And, a few miles west in Woodley Park, the American Society on Aging will have its annual meeting. The convergence is pure coincidence, but the lesson to be drawn from it is not. On both the Hill and the Woodley Marriot, the driving, underlying cause of the debates will be the mismatch between 20th century models of aging and 21st century demographic realities.

As Americans live longer -- 30 years added just in the last century -- is it any wonder the country is struggling to balance its budget? Is it any wonder we can't figure out how to pay for long-standing "entitlements"? It's a difficult and even bitter struggle, but the suits in Washington should take solace.

We're not alone. In the UK, there's an equally contentious budget debate. In the EU, Greece, Ireland, Spain, Portugal, and Italy are each at or past the point of budget crises. And, across the Pacific, the Singaporeans have begun "special employment credits" for older workers. With the lowest fertility rate in the world − and thus a dearth of workers to pay into pension and retirement schemes − Singapore is trying all sorts of budget-balancing maneuvers.

What Singapore is getting to, and what the U.S. needs to recognize, is that we need to fundamentally rethink what it means to age in the 21st century. At the heart of the budget debate, and at the top of the agenda at the American Society of Aging, is how to transform the ways that populations age − how to move away from models of disability and dependency and towards models of health and activity. Without these changes, neither the Obama nor the Ryan budget will get us anywhere.

Looking ahead, we need to stop focusing on competing budget plans and start focusing on how to stimulate economic growth. There are two keys to doing so: lowering old-age dependency ratio, and raising the bar on healthy aging.

First, let's look at old-age dependency ratios. In the U.S., there are 77 million baby boomers passing through traditional retirement age. With life-spans commonly running into the 80s and 90s, this is going to skyrocket the number of older dependents within the American economy. Already, the U.S. old-age dependency ratio is 22. That means that for every 100 working-aged people there are 22 people over 65, roughly a 5:1 ratio. This ratio, which is already almost double that of China, is going to devastate the American economy if it is allowed to continue on its current trajectory. This is exactly why Singapore -- which is even "older" than America -- has made initiatives to re-employ older workers.

The same holds across the Atlantic. In Italy, where dependency ratio is 34, and where the European social welfare system has failed to adapt to new demographic realities, the national economy has tanked. Once one of Europe's strongest economies, many are now predicting that Italy will become the next Greece. And in Japan, where the old-age dependency ratio is the highest in the world at 38, the country is at the point of crisis. And the future is bleak.

The underlying trigger for the meltdown of these two traditional economic powerhouses is the failure to integrate the aging into social and economic life. Retirement and pensions for 20 to 30 years for upwards of 40 percent of the population relies upon an impossible arithmetic.

The second key to economic growth during an unprecedented aging phenomenon is to invest in and create paths for healthy aging. Most critically, this means treating and preventing the non-communicable diseases (NCDs) that are directly related to aging. As the United Nations recognized last September in a historical summit, the new global health threat is diseases like Alzheimer's, diabetes, and cardiovascular disease. And the World Health Organization agrees, referring to NCDs at "the invisible epidemic."

As the American population becomes older, NCDs rates will skyrocket. With cardiovascular disease, for example, each decade of life brings a two- to three-fold increase in mortality from the disease. With diabetes and Alzheimer's, the story is similar. The burden of NCDs is two-fold. On one hand, it costs billions each year to treat them. On the other hand, millions of workers are isolated from social and economic life as they suffer from these diseases−−. Indeed, from an economic standpoint, the sword is double-edged.

The parallels between NCD rates and unhealthy aging are inextricable. Looking ahead, we need to stop bickering over Medicare payment plans and start discussing how to reduce the demand for care by keeping older adults healthier and more productive. Both the Ryan and Obama budgets fail to recognize this, and the Europeans and Japanese are no more focused. Indeed, to solve our budget crisis, we need a culture shift on what it means to age. Let's hope that the conversation at the ASA Conference this week can lead Capitol Hill and beyond the two Oceans into Europe and Asia.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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