Public policy implications of declining old-age mortality.

Recent years have witnessed dramatic improvements in the longevity of the US elderly population. This paper explores some policy implications of the dramatic longevity gains that have occurred and are likely to continue. It focuses on the potential burden through demand for medical care and other resources that the elderly are likely to create. The paper surveys some relevant evidence and presents some new calculations bearing on the effects of mortality improvements. While the available data permit only tentative conclusions it appears that reductions in morbidity associated with declining mortality have been counterbalanced by high morbidity rates among marginal survivors. As a consequence the health needs of elderly persons at given ages have not changed very much. The author argues that Poterba and Summerss conclusion that future medicare costs and costs of institutionalization can be predicted from current age-specific information consistent with the model and the empirical work but in practice it is too sweeping because it ignores the advent of the Medicare prospective payment system. Second Poterba and Summers argue that there is little basis for proposing a redefinition of the elderly because the health status of the typical 65-year-old 20 years from now is likely to be about the same as it is now but even if one accepts the argument that selection and medical progress have approximately offset each other in the past 20 years they may not do so in the next 20. Thirdly Poterba and Summers argue that it would be desirable to reorient medical progress toward policies that are less selective in their efforts on mortality but the author thinks that any attempt to reorient federal research and development policy may be ineffective in reorienting the total research and development effort.