The Implications of Demographic Change on the Future of Medicare: Racial and Gender Disparities in Longevity, Physical Stature, and Lifetime Medicare Expenditures

Abstract

Medicare is the most important publicly financed insurance programme in the US, with an annual budget at $500 billion or higher. It covers the majority of the inpatient, outpatient and prescription drugs expenditures of the seniors from age sixty-five until death. Using nationally representative data of current Medicare beneficiaries, this study estimated the dynamic relationship among gender, race, body weight, height, longevity, and lifetime Medicare expenditure. Next, we projected the trajectories of the total financial influence of demographic and biological changes in retirees on Medicare in the future. We found the increasing proportion of African Americans will lead to disproportionately lower lifetime Medicare expenditures per capita, due to racial disparities in longevity and access to outpatient care, but expect such disparities to decrease in the future. We also found the financial burden of obesity could be magnified by the increasing obesity rates among the white population.