Do the Social Security Projections Underestimate Future Longevity?

Both Job-Based Health Coverage and Uninsured Continue to Rise, CPS Shows

November 1999, Vol. 20, No. 11
Paperback, 16 pp.
PDF, 83 kb
Employee Benefit Research Institute, 1999

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Executive Summary

Do the Social Security Projections Underestimate Future Longevity?—Few developments have done more to shape the modern world than declining mortality—or, to put it another way, rising longevity. If it weren't for the reduction in mortality rates since the beginning of the century, one-quarter of all Americans alive today would already be dead; another quarter would never have been born (since their parents wouldn't have been around).

One of the most far-reaching consequences of this revolution—the explosion in the number of elderly—still lies largely in the future. Declining mortality is not the only cause of the “age wave”—or the accompanying growth in Social Security costs. But assumptions about future reductions in mortality have a large impact on Social Security projections, and many demographers believe that the Social Security Administration's (SSA) assumptions are too conservative. In its official “inter- mediate” scenario, SSA projects that mortality in the next century will decline at just half of its long-term historical rate. It thus assumes, at a time of stunning medical advances, that U.S. life expectancy 50 years from now will be no higher than Japanese life expectancy already is today. If SSA's pessimism proves unfounded, the Social Security cost problem could be bigger than officially projected, perhaps much bigger. To quantify the impact of more rapid declines in mortality, alternative mortality scenarios were run using SSASIM.

Both Job-Based Health Coverage and Uninsured Continue to Rise, CPS Shows—Almost 155 million Americans under age 65—or 64.9 percent of the nonelderly population—were covered by an employment-based health plan during 1998, according to Employee Benefit Research Institute (EBRI) estimates of the March 1999 Current Population Survey (CPS). This is up from 64.2 percent in 1997. An additional 15.5 million nonelderly Americans—or 6.5 percent of the nonelderly population—were covered by an individually purchased plan. The CPS data also show that almost 44 million Americans—or 18.4 percent of the nonelderly population—did not have health insurance during any part of 1998, up from 43.1 million, or 18.3 percent, in 1997. The percentage of nonelderly Americans without any source of health insurance coverage has been risin