Death & Taxes May Be the Only Sure Things in Life - But Can We Postpone Them?

As I discussed in a recent post over at the Global Health Policy blog, a new UN report (pdf) announcing an aging world has serious implications for health. It also portends some tough decisions need to be made about public finance - decisions that U.S. policymakers have so far ducked.

An aging world population is bringing about a shift in public finances as the working age population shrinks relative to the retirement population. This implies less tax revenue from labor income will be available to support a heavier expenditure burden from social security and medical needs. The hardest-hit countries are experimenting with a variety of innovative policy approaches, including indexing of public pension systems in Germany, Japan, and Sweden to account for changing demographics; increasing savings either through private or public pension systems (Australia, Sweden); and investing to try and get a better return on public retirement funds (Canada.)

Some farsighted developing countries are also experimenting with social insurance schemes for the aged (Chile, Argentina), while others have virtually no systems in place to cope with greater longevity combined with increased prevalence of costly chronic diseases. The developing countries that are further along in the demographic transition would do well to study the trials and errors of the aging developed countries and prepare themselves.

The demographic pressure on the U.S. is not as immediate as it is in other developed countries since it has a large and growing young population. However, the low savings rate and high health care costs in the U.S. constitute major challenges (pdf) to be addressed before population aging sets in. Time is a-wasting in many countries to slow the rising burden of chronic diseases and shift public financing priorities so that one in four people aren't facing a combination of serious illness and collapsed public finances in 2050.