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Medicare Trustees 2013 Report

Medicare Trustees 2013 Report

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Published by HLMedit
The financial status of the Medicare Hospital Insurance (HI) Trust Fund and the Social Security trust fund shows modest improvement in the outlook for hospital insurance long-term finances.
The financial status of the Medicare Hospital Insurance (HI) Trust Fund and the Social Security trust fund shows modest improvement in the outlook for hospital insurance long-term finances.

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Published by: HLMedit on May 31, 2013
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05/06/2014

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The Office of the Chief Actuary at the Social Security Administration devel-
ops average percentage reductions in future mortality rates by age group,
sex, and cause of death. The office uses these percentages to estimate future
central death rates by age group, sex, and cause of death. From these esti-
mated central death rates, the office calculates probabilities of death by sin-
gle year of age and sex.
The Office of the Chief Actuary calculated historical death rates for years
1900-2009 for ages below 65 (and for all ages for years prior to 1968) using
data from the National Center for Health Statistics (NCHS).1 For ages 65
and over, the office used final Medicare data on deaths and enrollments for
years 1968 through 2009 and preliminary data for 2010. The office produced

1 These rates reflect NCHS data on deaths and Census estimates of population.

Assumptions and Methods

80

death rates by cause of death at all ages for years 1979-2009 using data from
the NCHS.
The total age-sex-adjusted death rate1 declined at an average annual rate of
1.11 percent between 1900 and 2009. Between 1979 and 2009, the period for
which death rates were analyzed by cause, the total age-sex-adjusted death
rate, for all causes combined, declined at an average rate of 0.99 percent per
year.
Death rates have declined substantially in the U.S. since 1900, with rapid
declines over some periods and slow or no improvement over the other peri-
ods. Historical death rates generally declined more slowly for older ages and
more rapidly for children than for the rest of the population. Between 1900
and 2009, the age-sex-adjusted death rate for 65 and over declined at an
average rate of 0.81percent per year, while declining at an average rate of
3.10percent per year for ages under 15.
Many factors are responsible for historical reductions in death rates, includ-
ing increased medical knowledge, increased availability of health-care ser-
vices, and improvements in sanitation and nutrition. Considering the
expected rate of future progress in these and other areas, the Trustees assume
three alternative sets of ultimate annual percentage reductions in central
death rates by age group and cause of death, for 2037 and later. The interme-
diate set, alternative II, represents the Trustees’ best estimate. The average
annual percentage reductions for alternative I (low-cost) are smaller than
those for alternative II, while those for alternative III (high-cost) are larger.
These ultimate annual percentage reductions are the same as those in last
year’s report.
For the years 2010 through 2012, the assumed reductions in central death
rates are the same as the average annual reductions by age group, sex, and
cause of death experienced between 1999 and 2009. After 2012, the assumed
reductions in central death rates for alternative II change rapidly from the
average annual reductions experienced between 1999 and 2009, until they
reach the ultimate annual percentage reductions for 2037 and later. The
assumed reductions in death rates under alternatives I and III also rapidly
approach their ultimate levels, but start from levels which are, respectively,
50 and 150percent of the corresponding alternative II level.
Table V.A1 contains projections of age-sex-adjusted death rates for the total
population (all ages), for ages under 65, and for ages 65 and over. Under the

1 Based on the enumerated total population as of April 1, 2000, if that population were to experience the
death rates by age and sex for the selected year.

81

Demographic Assumptions and Methods

intermediate assumptions, projected age-sex-adjusted death rates are lower
than the death rates in last year’s report. These changes primarily result from
incorporating two additional years of historical data.
After adjusting for changes in the age-sex distribution of the population, the
projected total death rates decline at average annual rates of about
0.42percent, 0.80percent, and 1.21percent between 2012 and 2087 for
alternatives I, II, and III, respectively. In keeping with the patterns observed
in the historical data, the assumed future rates of decline are greater for
younger ages than for older ages, but to a substantially lesser degree than in
the past. Accordingly, the projected age-sex-adjusted death rates for ages 65
and over decline at average annual rates of about 0.39percent, 0.73percent,
and 1.09percent between 2012 and 2087 for alternatives I, II, and III,
respectively. The projected age-sex-adjusted death rates for ages under 15
decline at average annual rates of about 0.77percent, 1.55percent, and
2.54percent between 2012 and 2087 for alternatives I, II, and III, respec-
tively
Demographers express a wide range of views on the likely rate of future
decline in death rates. For example, the 2011 Technical Panel on Assump-
tions and Methods, appointed by the Social Security Advisory Board,
believed that ultimate rates of decline in mortality would be higher than the
rates of decline assumed for the intermediate projections in this report. Oth-
ers believe that biological factors, social factors, and limitations on health
care spending may slow future rates of decline in mortality. Evolving trends
in health care and lifestyle will determine what further modifications to the
assumed ultimate rates of decline in mortality will be warranted for future
reports.

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