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Aging, health & welfare

The challenge of an aging population

In developed countries around the world, populations are getting older. The first wave of baby boomers is already reaching retirement age, and many more are on the way, a global trend that will strain national economies and governments for decades to come.

Aging populations boost demand for government services — particularly in critical areas such as health care, retirement benefits, housing and transportation — driving costs into the stratosphere while leaving a steadily shrinking workforce to shoulder the load.

In the United States, the number of people age 55 and over is nearly 20 percent of the working-age population. That's a 50 percent increase over 1990 — a shift that places a tremendous burden on the active working population. Developed countries in Europe and Asia face a challenge of similar magnitude.

Key issues:
  • Containing health care costs: Older people have more health problems and require more care. Meanwhile, the cost of health care continues to skyrocket. If those costs cannot be contained, governments will soon face some very tough choices.
  • Saving retirement programs: As the population ages, young workers must toil longer and harder to support an increasing number of retirees — all the while knowing the retirement system could be bankrupt before they see any benefits themselves.
  • Finding workers: As the working population shrinks, companies and government agencies will have trouble finding qualified workers. That labor shortage will drive up the cost of goods and services, throttling economic growth and making it hard for developed nations to compete against developing countries. 
  • Integrating services: Governments spend a lot of money on health and welfare, yet sometimes that investment can be wasted due to lack of coordination and information-sharing. In the United States, Texas and Florida are on the leading edge of a transformation, using third-party outsourcing to integrate the delivery of health and human services statewide. If they are successful, other governments are sure to follow.
  • Taking action: Everyone saw this problem coming, but few have been willing or able to do much about it. Now it's time to act. There are no easy solutions to the problem — but some approaches are clearly better than others. And just about anything is better than doing nothing.
Strategies for success:
  1. Provide incentives for health care providers and pharmaceutical companies to keep health care costs in check.
  2. Get serious about reforming retirement programs — before it's too late.
  3. Adjust immigration policies to attract young, skilled workers.
  4. Give people the option to work beyond retirement as employees instead of changing their status to contractors.
  5. Integrate departments and their supporting systems to improve efficiency and avoid redundant services.

Learn more

  • Serving the aging citizen
    Rethinking government strategy.
  • Aging Snapshot: Taking candy from a baby (boomer)
    Protecting retirement savings of an aging population
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