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Guest Article
(From the May 5, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)
Three recently released studies indicate wide disparities in health status and care based not only on income, but also based on the regions of the country and the ethnic mix of the doctor’s patients.
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CBO Findings – Longevity Tied to Income
Aside from the obvious individual detrimental effects of the longevity gap, CBO’s “Growing Disparities in Life Expectancy” study found this gap could have considerable adverse effects on the solvency of Social Security and Medicare. CBO’s study notes that increasing longevity has clear effects on Social Security and Medicare expenditures by increasing their costs. CBO also notes that any widening of the gap in life expectancy between high and low income individuals would reduce the progressivity of Social Security benefits.
CBO acknowledges the effect of the gap in longevity created by socioeconomic status is uncertain. The report also notes that the Social Security’s Disability Insurance program, which constitutes 17 percent of all Social Security recipients, provides progressivity because those who become disabled – obviously – have lower life time earnings. But, if lower income recipients have a shorter life span, those recipients will receive less Social Security income benefits than those living longer. Consequently, some might consider these lower overall benefits to low income Social Security recipients could be viewed as discriminatory to low income earners.
Although the CBO does not opine on the effects on employer-provided retirement benefit plans, these mortality changes could affect private pension plans and other retirement income investments as well. To the extent life expectancies are decreasing, it is possible, if improbable, that future mortality assumptions, which have consistently assumed increasing longevity, may have to be revised to assume a shorter life span.
County-by-County Study of Life Expectancy
In the 1980s through the 1990s, the longevity of 19 percent of females and 4 percent of males declined or remain unchanged according to the Harvard/University of Washington study. From 1993 to 1999, men living the counties with the lowest income and education levels experienced a decrease in longevity from a 9 year gap when compared with men in the wealthy and more educated counties to a loss of 11 years of longevity when compared with more wealthy and educated men. During the same time, the gap between women increased from 6.7 to 7.5 years. While disparities between communities that are wealthier and better-educated and communities that are less so were expected, the researchers originally thought that all communities were improving. The actual research showed that was clearly not so. Poverty and race explain some of the decline, but those factors could not explain all the difference.
“Canary in the Coal Mine”
The lead author of the Harvard-University of Washington study concluded, “The worse off are getting worse. There’s just more inequality.” Richard Suzman from the National Institute, commented, “One usually associates declines in life expectancy with Russia and the USSR after the fall … and countries in Africa in the midst of wars, etc.” But James Marks with the Robert Woods Johnson Foundation had the most pithy warning, “These counties may be the canary in the coal mine [indicating] the deterioration in the U.S. health standing relative to the rest of the world.”
| The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.
If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2008, Deloitte. |
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