Ohio's Approaching Fiscal Storm
When the news hit, no one was really surprised. Ohio's 85 and older population is rising, while its 15-44 age bracket heads for greener pastures elsewhere. [1] But while the census numbers made for one-day headlines, the implications for Ohio's future received scant attention.
Taking a step back, though, reveals a big picture that includes dramatic shifts in demographics, an unproductive tax system, and an unsustainable Medicaid program. The combination of these three interrelated factors is resulting in a dangerous mixture for Ohio's fiscal stability. If policymakers do not begin to address these issues now, today's budget woes will pale in comparison to the tasks ahead.
For years the population trends have been an unspoken reality buried in Ohio's subconscious. Now that the Census Bureau has confronted us about the problem, the time to actually address the numbers has arrived. The numbers are indeed dramatic. The Census Bureau reports that between 2000 and 2003, Ohio's 85 and older population grew by 20,000 residents. [2] The group has increased in size 34 percent over the last 10 years. [3]
But this is only the tip of the iceberg. As the Baby Boomer generation ages, the number of elderly residents in Ohio will skyrocket. Indeed, the number of 85 and over residents is expected to reach one million by 2050. [4] And while Ohio's 65 and older population is now growing slowly now, it is projected to jump from 13 percent in 2000 to 20 percent in 2030. [5]
"This is that calm before the storm," says Miami University's Scripps Gerontology Center director Suzanne Kunkel. [6]
For a state facing repeated budget shortfalls and trimming many non-federally mandated benefits, these are sobering - if not ulcer-inducing - figures. To compound the problem, few are adequately planning for these later years. The National Academy of Social Insurance states that there were only 5.8 million long-term care insurance policies in force nationally in 2001. [7]
This is likely because of an assumption that Medicaid and other programs will simply step in and take care of such matters as they arise. Indeed, lawyers have developed a niche for training seniors and their children on how to "spend down" even substantial wealth and qualify for state assistance. Medicaid, created as a safety net for the poor, has become an entitlement for all, regardless of income. [8]
Ohio's aging population is worrisome enough, but the situation is aggravated by the state's loss of its younger generation. Ohio lost close to 90,000 residents between the ages of 15 and 44 in the last three years alone - more than any other state in the U.S. [9] Clearly, rather than being viewed as a hotbed of opportunity, Ohio is becoming the nation's nursing home.
Much of this may be due to the state's disastrous tax policies and resulting stagnant economic growth. Research has shown a clear link between high taxes, low growth, and residents that "vote with their feet." Ohio certainly bears that out, lagging behind most of its neighbors in growth while surpassing them in tax burden. [10]
In light of Ohio's current struggles to balance its budget, who will be left to pay for the additional costs of an aging population when its most productive residents are fleeing in droves?
Avoiding this coming crisis may not be simple, but it can be done. The time for a "wait and see" approach has long since passed. Policymakers must take action now to enact serious Medicaid reform and end the entitlement mentality that has arisen among Ohioans. At the same time, the era of budget shell games needs to come to a close. Legislators should begin the task of a true fundamental overhaul of Ohio's tax system.
Footnotes:
[1] Susan Jaffe and Rich Exner, “85-plus group increases 11 percent in Ohio, nationally,” The Cleveland Plain Dealer, 10 March 2004. Available at: http://www.cleveland.com/.
[2] Ibid.
[3] Robert Applebaum, Testimony before the State Commission to Reform Medicaid, Miami University Scripps Gerontology Center, 20 February 2004. For more information, visit: http://www.scripps.muohio.edu/scripps.
[4] Ibid.
[5] Kathleen King, Testimony before the State Commission to Reform Medicaid, National Academy of Social Insurance, 20 February 2004. For more information, visit: http://www.nasi.org/.
[6] Jaffe and Exner, “85-plus group…”
[7] King, Testimony.
[8] For more information on the problems associated with lack of long-term care coverage, visit The Center for Long-Term Care Financing at: http://www.centerltc.org/.
[9] Jaffe and Exner, “85-plus group…”
[10] See Richard Vedder, Grinding to a Halt: Ohio's Tax Policy and its Impact on Economic Growth, The Buckeye Institute, September 2002.
