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Michael Hodin Headshot

America's Aging Population Can Save Medicare

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You know you've arrived at a real inflection point when fashion, politics, and the urban intelligentsia collide. In New York, Carmen Dell'Orefice (81) adorns promotional banners and blogs during the run-up to the Fall Fashion shows. At the 92nd Street Y on Manhattan's Upper East Side, Mayor Koch (87) and former Fed Chairman Paul Volker (84) lead a talk to "share relevant information and wisdom" for NYC's unofficial intelligentsia. And in The Villages, Florida - the self-proclaimed "friendliest retirement hometown" -- a newly-minted Paul Ryan enters stage right with his vibrant mother (78) to declare how he and Governor Romney plan to "save Medicare."

This unlikely collision of Fashion Week, the fashionable Manhattan Y, and the impossibly unfashionable "retirement communities" of the Sunshine State speak of a larger cultural shift that is upon us. In this young century, we are witnessing a new old. We are witnessing the emergence of a new aging process where people remain healthy, active, and productive -- not to mention beautiful, smart, and politically savvy -- into their 60s, 70s, and 80s.

So it's no wonder that this new kind of aging -- and its impact on Medicare -- has become a watershed issue of the 2012 Presidential campaign. But for all the speeches delivered by the politicians and all the ink spilled by the cognoscenti, everyone is missing the point. It's not that the 77 million Baby Boomers in the U.S. are going to bankrupt Medicare. The point is just the opposite. However ironic it may seem, this new, gigantic aging cohort is going to save the social insurance program.

How, indeed, can the explosive demand brought by the unprecedented aging of the American population save a program that pays out to the aging?

Fully embraced, an active, productive aging is creating and will continue to create a culture shift in which "seniors" break out of traditional roles of "need" and "dependency" and become vibrant producers in our society. No longer the automatic recipients of government welfare -- and popular pity and condescension -- healthy, vital seniors will remain at the heart of social and economic life and spare the precious federal insurance dollars for those really in need. This is not FDR's or LBJ's aging population, and we shouldn't treat it as such.

But this transformation of aging isn't just culturally liberating. It's also economically essential. In the United States, there will soon be more people over 65 than under 15. So we're not just witnessing a new kind of aging; we're seeing the emergence of a new kind of society, one where older adults outnumber children. From both a social and a financial point of view, how can we look these demographic realities in the eye and not re-think how we provide healthcare and other essential services to the aging?

When Medicare was created in 1965, only 10 percent of Americans were over 65 and eligible. Today, this number has crept to 13 per cent, and by 2030 it will reach 20 per cent. No matter your political bent, this arithmetic is irrevocable.

An older America, however, need not be an obituary for Medicare. In fact, if we embrace this progressive, optimistic view of aging, the purported Medicare crisis becomes an opportunity. It is no secret that the American economy is in rough shape right now, and something substantial needs to change in order to jumpstart growth. The cultural change that is going to save Medicare is the same changes that put the U.S. economy back on track. If older adults remain at the heart of social and economic life, then the U.S.'s largest population segment will become the U.S.'s "demographic dividend."

Economists and demographers often refer to the "demographic dividend" as the working-aged population that is driving economic growth. For the past couple of decades, much of Asia, for example, is seen to have a demographic dividend because its 18-to-55 population is far larger than the over-55s. But this culture shift that overtaking fashion week and presidential politics reveals that the U.S.'s aging population is its demographic dividend.

Fundamentally, our current political dialogue has the Medicare issue completely backwards. It's not just that Medicare needs to change in order to survive in an era of an older society; it's that our idea of aging itself needs to change in order to allow Medicare to survive.