TABLE 7-8.-EQUIVALENT POVERTY RATES FOR ELDERLY FAMILIES BY AGE GROUP, FOR SELECTED Source: Data taken from the Luxembourg Income Study as reported in Torrey, Barbara Boyle, Kevin G. Kinsella, and Cynthia M. Taueber, U.S. Bureau of the Census. "An Aging World." Chart 7-10 EQUIVALENT POVERTY RATES FOR ELDERLY FAMILIES BY AGE GROUP, SOURCE: Data taken from the Luxembourg Income Study as reported in Torrey, Barbara Boyle, Kevin G. Kinsella, and Cynthia M. Taueber, U.S. Bureau of the Census. "An Aging World" 'Less than 0.05 percent. See table 7-8 above for dates of data collection. GOVERNMENT EXPENDITURES WHILE THE SHARE OF GROSS DOMESTIC PRODUCT SPENT ON PENSIONS IN THE UNITED STATES IS ABOUT AVERAGE AMONG SEVEN MAJOR DEVELOPED COUNTRIES, THE SHARE SPENT ON MEDICAL CARE IN THE UNITED STATES IS ONE OF THE HIGHEST A recent study of seven major industrial countries found that social expenditures in the United States (medical care, pensions, education, unemployment, family benefits, and other social programs) consumed a proportion of the Nation's gross domestic product (GDP) about equal to the other countries, except Japan. However, the United States differed from the other countries studied in the proportion of social expenditures generated by private funding sources. In the other countries, nearly all of these expenditures came from government funds; but in the United States the private sector was responsible for about one-third of all social expenditures (table 7-9). 6 In 1980, the United States spent 8.1 percent of its GDP on pensions. While this share was nearly double that spent by Canada and Japan, it was a lower share than was spent by most European nations (chart 7-11). On the other hand, the 9.5 percent GDP spent on medical care by the United States in 1980 accounted for a higher share of its GDP than any of the other countries studied, and was more than twice as high as that of Japan. TABLE 7-9.-SOCIAL EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT FOR SELECTED COUNTRIES: 1980 Source: International Monetary Fund. "Aging and Social Expenditure in the Major Industrial Counties, 1980-2025." Occasional Paper 47, Tables 15 and 16 (September 1986). "The information in the section on social expenditures is taken from a report by the International Monetary Fund, "Aging and Social Expenditure in the Major Industrial Countries, 19802025." Occasional Paper 47, September 1986. Projected social expenditure patterns are based on current patterns. Differences in projected patterns reflect primarily the projected growth and changing age composition of each country's population and some assumptions regarding the economic effects of these changes. The demographic assumptions underlying the IMF population projections generally reflect "intermediate" assumptions provided by the countries studied (i.e., slight increases in fertility levels and continued improvements in life expectancy). Chart 7-11 GOVERNMENT AND PRIVATE SOCIAL EXPENDITURES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT FOR SELECTED COUNTRIES BY TYPE OF EXPENDITURE: 1980 SOURCE: International Monetary Fund. "Aging and Social Expenditure in the Major Industrial Countries, 1980-2025." Occasional Paper 47 (September 1986). THE UNITED STATES IS EXPECTED TO EXPERIENCE A LOW RATE OF GROWTH IN GOVERNMENT PENSION COSTS DURING THE NEXT 40 YEARS, SIMILAR TO THAT FOR MUCH OF THE DEVELOPED WORLD. BY CONTRAST, JAPAN IS EXPECTED TO HAVE A RATE OF GROWTH MORE THAN TWICE THAT IN THE UNITED STATES Japan has had over the last 20 years, and is projected to continue having over the next 40 years, the highest rate of growth in real government expeditures for pension costs. Japan's average annual rate of growth in pension spending of 14.1 percent between 1960 and 1980, and its projected annual growth rate of 5.9 percent between 1980 and 2025, are more than double the average rate of growth in the other countries studied. The historical and projected pension cost growth rates for the United States are about average for the developed world. Between 1960 and 1980, U.S. Government pension costs grew by an average of 6.2 percent a year (after adjustment for inflation). Between 1980 and 2025, U.S. Government pension costs are projected to grow at an average real rate of 2.5 percent (table 7-10 and chart 7-12). TABLE 7-10.-ANNUAL GROWTH RATE IN REAL GOVERNMENT PENSION EXPENDITURES FOR SELECTED COUNTRIES: 1960-80 AND 1980-2025 Source: International Monetary Fund. "Aging and Social Expenditure in the Major Industrial Countries, 1980-2025." Occasional Paper 47, Table 6 (September 1986). Chart 7-12 ANNUAL GROWTH RATE IN REAL GOVERNMENT PENSION EXPENDITURES SOURCE: International Monetary Fund. "Aging and Social Expenditure in the Major Industrial Countries, 1980-2025." Occasional Paper 47 (September 1986). U.S. GOVERNMENT EXPENDITURES ON MEDICAL CARE ARE EXPECTED TO GROW OVER THE NEXT 40 YEARS AT THE MOST RAPID RATE AMONG SEVEN SELECTED INDUSTRIAL COUNTRIES Real government expenditures between 1980 and 2025 for medical care are projected to increase by 80 percent in the United States and by 74 percent in Canada. Other countries are expected to have more modest increases, while West Germany is expected to experience little growth in real government medical care expenditures during the next four decades (table 7-11 and chart 7-13). TABLE 7-11.-PROJECTED INCREASES IN REAL GOVERNMENT EXPENDITURES ON MEDICAL CARE FOR SELECTED COUNTRIES: 2000 AND 2025 Source: International Monetary Fund. "Aging and Social Expenditure in the Major Industrial Countries, 1980-2025." Occasional Paper 47, Table 8 (September 1986). Chart 7-13 ACTUAL AND PROJECTED REAL GOVERNMENT EXPENDITURES ON MEDICAL CARE FOR SELECTED COUNTRIES: 1980, 2000, AND 2025 SOURCE: International Monetary Fund. "Aging and Social Expenditure in the Major Industrial Countries, 1980-2025." Occasional Paper 47 (September 1986). CONCLUSION The United States is distinguished among the nations of the developed world in the size and growth of its very old population. Today's U.S. elderly population is older than that in most other countries, and in 40 years, it will be one of the oldest elderly populations in the world. Older persons in the United States seem to work longer and have lower incomes than the elderly in most other developed countries. While U.S. Government pension costs appear to be average, the Government's medical care costs are the highest among the major industrial countries and are expected to grow rapidly. О |