Demographic Changes and the State · Major demographic changes that will impact the budget The...
Transcript of Demographic Changes and the State · Major demographic changes that will impact the budget The...
+ Demographic
Changes and
the State
Budget
Presentation to the Legislative Commission on Planning
and Fiscal Policy
Susan Brower, State Demographer
March 4, 2013 This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp
+ Major demographic changes that will
impact the budget
The aging population will place new pressures on the state budget, especially in the areas of health and long-term care
The retirement of the baby boomers will reduce labor force growth and potentially economic growth.
Our growing diversity requires attention, especially when there will be fewer workers relative to each retiree
Our state’s economic competiveness is a function of the quality of workforce
Minnesota’s water resources will become an increasingly important asset for our state’s population growth and economic competitiveness
+ Number of additional older adults will
increase substantially in next 20 years
Sources: U.S. Census Bureau and Minnesota State Demographic Center
85 55
71 67 47
91
- - - - -
1950s 60s 70s 80s 90s 00s 10s 20s 30s 40s 2050s
Change in older adults, age 65+ (Thousands)
+ Number of additional older adults will
increase substantially in next 20 years
85 55 71 67
47
91
285
335
97 66 56
1950s 60s 70s 80s 90s 00s 10s 20s 30s 40s 2050s
Change in older adults, age 65+ (Thousands)
Sources: U.S. Census Bureau and Minnesota State Demographic Center
+ A portrait of Minnesota, by age, 2011
0 100,000 200,000 300,000 400,000 500,000
Under 5 5 to 9
10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 to 69 70 to 74 75 to 79 80 to 84
85+
Total Population
Minnesota, 2011
Baby Boomers:
Age 47-65
Age 65
+ MN’s total 65+ population overlaid on
future biennia
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
Source: Minnesota State Demographic Center Projections, Revised Jan 2013
+ Increasingly our demographics will
change the demand for services
K-12
Education
42%
Health &
Human
Services
31%
Higher
Education
8%
All other
areas
19%
Medical Assistance Expenditures:
25% of GF spending (8.5 billion)
Medical Assistance Expenditures
for the Elderly and Disabled: 16%
of GF spending (5.5 billion)
MA expenditures include basic
care, long-term care waivers and
long-term institutional care
General Fund Expenditures
FY 2012-2013 Within Health & Human Services
Sources: Minnesota Management and Budget, February 2013. House Research, Long-
Term Care Services for the Elderly, November 2012
Conclusion from 2008:
If State Health Care Costs Continue Their Current
Trend, State Spending On Other Services Can’t
Grow
3.9%
8.5%
0.2% 0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Revenue Health Care Education & All OtherAn
nu
al A
ve
Gro
wth
2008
-2033
General Fund Spending Outlook, presentation to the Budget Trends Commission,
August 2008, Dybdal, Reitan and Broat
+
18-24
65+
5-17
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
2060
For the first time in MN history:
More 65+ than school-age by 2020
+ Medical expenses rise considerably
after age 65
$1,769 $1,814
$3,230
$6,429
$10,274
89% 85%
76%
89% 96%
U.S., 2010
Average annual expense Percent with a medical expense
Source: Medical Expenditure Panel Survey, 2010
+
Source: Stone, 2000
Need for long-term care is substantial
after age 85
+ A large share of baby boomers don’t
know how they will cover the cost of
their own long-term care
Source: Transform 2010 Survey, Minnesota Department of Human Services
Plans to pay for long-term care
Minnesota Baby Boomers, 2010
+ As share of older adults grow, working-
age shrinks and under 18 group is
unchanged
24%
63%
13%
2010
Under age 18
Age 18-64
Age 65+
24%
59%
17%
2020
Under age 18
Age 18-64
Age 65+
24%
55%
21%
2030
Under age 18
Age 18-64
Age 65+
MN population by age group share, 2010-2030
Source: MN State Demographic Center projections
+ MN’s labor force growth is projected to
slow
1.4% 1.4%
0.8%
0.4% 0.3% 0.3%
0.2%
0.4% 0.5%
1980 1990 2000 2010 2015 2020 2025 2030 2035
Average Annual Labor Force Growth,
1980-2035
Source: MN State Demographic Center projections
+ Recap: Budget implications of aging
Age brings rising health care costs & long term care needs
Anticipated enrollment and spending pressures in public
programs serving older adults, specifically 3 areas of Medical
Assistance (MA):
Basic Care (as a supplement to Medicare)
Elderly Waiver
Nursing Facilities
Potential reduction in income tax collections
Slower labor force growth could mean slower growth in GDP
+ MN: Largest growth among Asian, Black
and Hispanic groups by 2030
Source: Minnesota State Demographic Center
60,300
223,300 264,900 258,200
84,300 63,800
358,900
419,500
491,700
128,000
American
Indian
Asian Black Hispanic Two or More
Races
20102030
+ Poor outcomes
after 6 years of
high school for
many students
of color
22%
7%
21%
15%
5%
17%
12%
14%
4%
8%
6%
Percent of students who dropped
out after 6 years of high school, by
subgroup Minnesota, 2011
Two fastest growing
demographic groups in MN
Source: MN Department of Education
+ Wide disparities in educational
attainment exist among MN-born
19%
58%
37%
23%
50%
32%
0%
10%
20%
30%
40%
50%
60%
70%
American
Indian
Asian (other) Asian (SE
Asian)
Black White non-
Hispanic
Hispanic
MN-born young adults (age 25-39) with an AA
degree or higher by race/ethnicity
Source: Tabulated by MN State Demographic Center from the
Integrated Public Use Microdata Series
+ A portrait of Minnesota, by age
and race, 2011
0 100,000 200,000 300,000 400,000 500,000
Under 5 5 to 9
10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 to 69 70 to 74 75 to 79 80 to 84
85+
White (non-Hispanic) and Of Color Population
White (non-
Hispanic)
Of Color
Source: 2011 Population Estimates, U.S. Census Bureau.
Working-age
population, 2011 Working-age
population, 2021 Working-age
population, 2031
+ Recap: Implications of changing
workforce and diverse populations
Fewer school-age children relative to older adults will mean
pressures to shift resources from younger to older, but
these children will soon become our workforce
Fewer workers relative to older adults puts a premium on
highly educated and skilled workers — to fuel continued
economic growth and to pay for needed public services
Poor educational outcomes for our fastest-growing
populations of color jeopardize our economic
competitiveness and quality of life for all ages
+ Water resources and demographic,
economic growth
Water resources are essential for just about every
economic activity.
The fastest growing areas of the U.S. are also those
areas where ground water storage has declined most
markedly
Minnesota has an opportunity to gain relative to
other areas in the U.S. through the stewardship of its
water resources
+ Major demographic changes that will
impact the budget
The aging population will place new pressures on the state budget, especially in the areas of health and long-term care
The retirement of the baby boomers will reduce labor force growth and potentially economic growth.
Our growing diversity requires attention, especially when there will be fewer workers relative to each retiree
Our state’s economic competiveness is a function of the quality of workforce
Minnesota’s water resources will become an increasingly important asset for our state’s population growth and economic competitiveness
+
Susan Brower [email protected]