The challenge of population projections: future strain on Medicare and Social Security may be even greater than Census figures would suggest

By Steven Weisbart, Chief Economist, Insurance Information Institute

A few days ago, the Census Bureau made news based on its latest projection of the population of the United States over the next 40 years. One observation that the Bureau made was that the number of people over age 65 would soon outstrip the number under age 18—the first time that has happened in our history.

But one sharp-eyed economist/demographer quickly questioned the underlying projections, at least for the near term. Tom Lawler noted that one of the assumptions in the Census Bureau projections is expected deaths by age group which, for seven 10-year age groups from 15 to 85, were far below recent data published by the National Center for Health Statistics (NCHS). For example, in the 35-44 age group, the Census Bureau projection for the July 1, 2016-June 30, 2017 year was for 62,599 deaths, whereas for the 2016 calendar year the NCHS reported 77,792 deaths.

The Census Bureau was also off in the other direction, according to Lawler’s citing of the NCHS data, in over-projecting deaths for the under-1-year age group (39,741 for the Census Bureau, 23,161 for NCHS) and for the 85-and-over age group (909,723 for the Census Bureau, 854,462 for NCHS).

There are several reasons why getting the level and trend of population projections right is important. From any business viewpoint (including insurance), the number and life-stage of customers, as well as potential workers, can have a significant effect on plans for growth. More specifically, using the NCHS numbers implies a smaller “prime working age” population (ages 25-54) than the Census Bureau projects, coupled with a larger 85-and-older population—suggesting greater strain on Social Security and Medicare than would otherwise be expected.

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