America’s falling birth rate is a problem
When Medicare was established in 1965 and when Social Security was vastly expanded in 1972, America was accustomed to the high birthrates of the posWorld War II baby boom. It was widely assumed that the baby boom generation would soon produce a baby boom of its own.
Oops. The birthrate fell from the peak of 122.7 in 1957 to 68.8 in 1973 and hovered around that level until 2007. The baby boom, it turns out, was an exception to a general rule that people tend to have fewer babies as their societies become more affluent and urbanized.
Social Security had to be tweaked in 1983 when it became clear there weren’t enough working-age people to fund benefits promised to the elderly. It needs tweaking again today for the same reason.
Medicare presents even greater problems. Health care costs have generally been rising at rates above economic growth.
By itself, this is not necessarily a problem. Economic growth and market competition have enabled Americans to spend smaller percentages of their incomes on food and clothes, with more left over to spend on other things.
Spending more on health care is a sensible thing for an affluent society to do. Especially as new medical procedures and drugs mean that health care can deliver more than it used to.
But in a society in which the elderly are an increasing share of the population and working-age people are a decreasing share, it becomes increasingly difficult to fund these programs.