Report: Rich people live longer and reap greater entitlement benefits

In the U.S., the gap in life expectancy by income is getting wider. To be even clearer: Life expectancy for people with higher incomes has gone up over time, while life expectancy for people earning lower incomes has actually declined.

In “The Growing Gap in Life Expectancy by Income: Implications for Federal Programs and Policy Responses,” which the National Academies of Sciences, Engineering and Medicine released last week, authors analyzed life expectancy patterns among Americans born in 1930 and compared them with projections among a group of Americans born in 1960. They found that top-earning men born in 1930 and who survived to age 50 could expect to live to about 82; men born in 1960 and in the same earnings income bracket could expect to live to 89 years old. Note that seven years is a substantial gain. On the other hand, men born in 1930 and who had the lowest earnings lived an average of 77 years; that average life expectancy actually declined to 76 years for the lowest-earning men born in 1960.

Overall, findings translate into no net gains for life expectancy at age 50 for people at the bottom of the socioeconomic ladder. The report found an even bigger gap among women. In that category, using the same calculations, the report found:

For females, the results appear even more pronounced, although the estimates are less reliable. The committee estimates suggest that life expectancy at age 50 for females at the bottom of the earnings distribution declines markedly between those born in 1930 and the projections for those born in 1960, from 32.3 years to 28.3 years. At the top of the female earnings distribution, however, life expectancy is projected to rise by more than 5 years. The result is that the gap in life expectancy between high-earning females and low-earning females is projected to expand from 4 years to 13.6 years.

The disparity in life expectancy by income is troublesome in its own right and reveals just how influential income is as a social determinant of health. But this report did more than look at life expectancy; it also examined the effect of life expectancy gaps on benefit programs such as Social Security, Medicare and Medicaid. Not surprisingly, the report found that higher-income earners who also tend to live longer collect more public benefits. In some cases, a lot more.

(This is a particularly interesting point, especially on the question of fairness: Are many low-income earners dutifully paying into a universal system that ends up distributing more benefits to the rich? In addition, the finding underscores the argument that all the political wrangling on cutting spending by raising the eligibility age for Social Security and Medicare benefits would end up disproportionately impacting the poor, who may then stand to gain even fewer benefits than before.)

So, here’s what the report found on the benefits front. For men born in 1930, lifetime entitlement benefits received after age 50 were fairly similar across the income groups. But for men born in 1960, high-income earners are projected to receive much more than low-income earners — specifically, $132,000 more in benefits from entitlement programs. For women born in 1960, the highest earners are projected to get $28,000 more in lifetime benefits than those in the lowest income bracket. Overall, the difference in entitlement benefits means that higher earners are experiencing a 7 percent bump in their wealth at age 50 due to disproportionately longer life expectancy.

The report authors didn’t make their own policy recommendations based on the report’s findings, but they did use the findings to evaluate frequently proposed entitlement reforms. For instance, increasing earliest Social Security eligibility from age 62 to 64 wouldn’t result in significant savings, but would widen the benefit gap between high- and low-income earners. Increasing normal Social Security retirement age from 67 to 70 would result in big savings as well as modestly narrowing the benefits gap between high- and low-income earners. Lowering initial benefits for the top 50 percent of earners would also result in big savings for Social Security and would significantly narrow the lifetime benefits gap — by 30 percent among men and 40 percent among women. On the flip side, raising eligibility age for Medicare from 65 to 67 would impact the lowest earners more than the highest, widening the benefits gap.

The report concluded: “Given the impact that such effects can exert on the nation’s most important social insurance programs, the increasing inequality in life expectancy at different points of the earnings distribution is an issue worthy of attention from policy makers and researchers alike.”

To download a full copy of the report, visit the National Academies of Science, Engineering and Medicine.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for more than a decade.

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Some possible solutions you might like:

1)Make everyone’s income or wealth the same, or
2)Allow some disparity of income and wealth, but make the minimum income $100,000, or better yet, $200,000.

What do you think, Kim?

By See Noevo (not verified) on 24 Sep 2015 #permalink