Aging Surge Poses Challenge for States

State leaders are getting gray hair worrying about the impending impact of America’s aging population, but they’re only slowly taking steps to meet the challenges that will arise as post-World War Two baby boomers start reaching retirement age in 2011.

The impact is already apparent in Florida, West Virginia, Pennsylvania, North Dakota and Iowa, states with the highest percentage of people over 65. But it will soon become more widespread. By 2030, nearly one American in five will be 65 or older. Fewer than one in eight are elderly now.

An aging population will bring workforce shortages, new pressure on the nation’s already shaky health care system and declining state revenues. These and other looming policy  challenges are getting some notice at a series of state conferences being held in advance of a White House Conference on Aging scheduled for December, but so far there’s little concrete action. 

“Very few states have done the kind of planning that would even let them become aware of what the needs are. I don’t think there’s any state that has implemented a comprehensive action plan… States, even more than the federal government, are faced with a lot of challenges in the immediate future, and they tend to focus on those,” said John Rother, AARP’s director of legislation and public policy. 

Do the math, and the state financial outlook is bleak. Income tax revenue will plummet because seniors’ incomes usually are lower. Sales tax revenue will decline because older people buy fewer taxable goods. 

As the percentage of older people increases, tax breaks enjoyed by the elderly in most states (such as Massachusetts’ $500 property tax break for people 70 and older who earn less than $13,000 a year if single and $15,000 if married) will also take a bite out of tax revenues. Most affected will be states with the largest tax breaks for older people — Michigan, Kentucky, Georgia, South Carolina, Hawaii, Indiana, Idaho, Oregon Wisconsin, Connecticut and Illinois, according to a study by the Center on Budget and Policy Priorities. 

The most obvious impact will come on state-provided health care. Health care costs of older people are significantly higher than for younger people. According to the Centers for Disease Control and Prevention, one of every three U.S. citizens aged 65 years and older falls each year. Older people are more likely to suffer depression. They are the largest consumers of high-cost prescription drugs as an age group. And a staggering 20 percent of newly diagnosed HIV cases occur in Americans over 50. 

Because many older people won’t be able to drive, their health needs also translate into transportation planning challenges. Those who do drive pose another policy problem as they increase in years — motor vehicle-related fatalities are higher among adults 75 years and older, compared with adults between 65 and 74 years of age, the CDC said. 

The aging of America will transform the economy. Already there is a shortage of workers to care for the elderly. Pension funds will be stressed with more payouts to retirees. 

Aging will also take its toll on state workforces where nearly 44 percent of employees are age 45 and older, according the National Governors Association. Some state leaders, such as Virginia Gov. Mark Warner (D), expect people to change their concept of retirement and find a part-time place in the workforce. 

States have only taken baby steps to prepare for such challenges. 

Nearly half the states have established Aging and Disability Resource Centers so elderly residents can learn about ways state government can help them. The National Association of State Units on Aging, a non-profit association representing aging agencies, is urging the federal government to fund the creation of even more of these centers. 

Twelve states have started fall-prevention programs. Several states are promoting healthy living among the elderly through exercise programs. West Virginia, for example, started a statewide program to encourage senior citizens to increase their physical activity by using a pedometer and getting involved in a walking program. And Florida has launched a program to adapt physical infrastructure to older people’s needs. Under the program, communities provide pedestrian-friendly neighborhoods, public transportation options and accessible buildings.