In a recent publication, researchers from the Department of Economics at Colorado State University highlight the growing inequalities in well-being among older Americans, suggesting that health in later life is more significantly shaped by social determinants, such as our residential environment, educational attainment and access to resources, rather than individual decisions alone.
Led by Assistant Professor Ray Miller and collaborator Neha Bairoliya from the University of Southern California’s Marshall School of Business, the research team sought to explore the impact of late-life health disparities on consumer spending patterns and economic decisions in individuals aged 60 and above, guided by data that older adults with more wealth tend to be healthier.
“If you look at the top 20% of Baby Boomers, they’re doing quite a bit better than the older population 20 years ago,” Miller said. “Even in the top half of the distribution, we see a bit higher income and life expectancy overall. But if you look at the bottom 10-20% of Baby Boomers, they haven’t accrued nearly as much of the health or wealth gains that you see at the top end.”
The tale of two socioeconomic classes suggests that the health of wealthier adults is improving with time, whereas lower income adults face stagnant health conditions. For Miller, the pivotal question is how to achieve a more equitable distribution of wealth and health that fosters shared prosperity for older populations in the future.
Welfare modeling
Building on their previous study, the researchers applied the notion that overall well-being cannot be assessed by looking solely at an individual’s wealth or income. Rather, health and longevity indicators – such as mortality and morbidity rates, life expectancy, and incidence of disability – provide a more holistic understanding of well-being in older populations.
Analyzing data from the Health and Retirement Study, a longitudinal dataset following multiple cohorts of older individuals since 1992, Miller and Bairoliya found that gaps in well-being among older Americans have been growing faster than previously believed based on narrow economic outcomes, such as income and consumer spending, in part due to health disparities.
For example, roughly 10 to 12% of the gap in consumer spending between college-educated individuals and those who dropped out of high school could be attributed to health conditions that led to higher medical spending, forced early retirement and reduced income.
Policy intervention
One of the study’s key takeaways is the importance of addressing growing inequalities among older populations. With the entire Baby Boomer cohort projected to be age 65 or older by 2030, it is becoming increasingly crucial to implement policies that address disparities in both health and economic outcomes. The time to debate billions of dollars in federal funds for essential public services over the next decade is now.
Miller referenced healthcare provisions in the Inflation Reduction Act as an example of policy that could curb inequality in older Americans. Signed into law in August 2022, the act proposes an annual cap of $2,000 on out-of-pocket drug costs for people enrolled in Medicare Part D starting in 2025 and authorizes the Department of Health and Human Services to negotiate prices for some top-selling drugs covered in Medicare.
These measures free up money for older adults to spend elsewhere in the economy – on housing or food, for instance – which could reduce economic gaps for older Americans, Miller said.
“At the same time, this policy could increase the usage of prescription drugs that are really needed,” he added. “Whereas maybe they were cost prohibitive for some people before, now more people will be able to afford these drugs, and we may see a reduction in health disparities by expanding that access.”
In addition to policy interventions that directly affect older adults, policies targeted at early life, such as childhood or young adulthood, can have long-lasting impacts in later life, as well.
Gaps across dimensions
While this study specifically examined well-being gaps in later life, health disparities can also persist across other dimensions, such as gender, sexual orientation, disability status, socioeconomic status and geographic location.
Miller’s future work includes an ongoing study focused on racial gaps in well-being among older populations, as well as a study focused on a widening well-being gap between older Americans in rural vs. urban settings over time. Early findings suggest that racial and ethnic inequality is larger than suggested by other welfare metrics, and that, on average, well-being among rural Americans is only 72% that of older urban Americans. Other work by Miller and collaborators examines the economics of late-life depression and caregiving.
Each project works toward an overall goal of Miller’s research, which seeks to provide evidence-based insights to inform policymakers on effective strategies to improve well-being for older populations.
