Expanding Social Security May Pay for Itself! Higher Benefits May Decrease Alzheimer's and Dementia

This new research provides one more compelling argument in favor of expanding Social Security. In addition to its possible impact in reducing or delaying Alzheimer's and other dementia in some seniors, expanding those modest benefits addresses other serious challenges facing our country.
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Public health experts quip that when it comes to your health, your zip code can be more important than your genetic code. They understand that there are many factors that are crucial to health outcomes, and a major one is financial security and stability. Groundbreaking new research, showing that increasing Social Security's modest benefits may delay or even avert Alzheimer's and other forms of dementia, proves just how profound that quip is.

Alzheimer's is a degenerative brain disorder that damages and destroys brain cells, leading to memory loss, changes in thinking and ultimately death. Anyone who has witnessed elderly relatives who have Alzheimer's and are unable to recognize their own children understands the high emotional toll that the disease brings. The physical toll on family caregivers is enormous. And the financial cost to our nation is huge.

Currently, 5.3 million Americans suffer from Alzheimer's. Women, African-Americans, and Hispanics are disproportionately afflicted with this cruel disease. And the percentage of Americans with Alzheimer's is growing.

In 2015 alone, Alzheimer's and other dementias will cost the nation $226 billion, half of which will be spent by Medicare, consuming nearly one of every five Medicare dollars spent. By 2050, costs are projected to rise as high as $1.1 trillion. Those costs are projected to consume one of every three Medicare dollars, so that even a small reduction in the incidence of the disease has an enormous fiscal impact.

Rising along with the percentage of the population that suffers from Alzheimer's is the percentage of Americans who provide their care. This care giving work is physically, emotionally and financially draining. In 2014, caregivers provided an estimated 17.9 billion hours of unpaid labor, the equivalent of an estimated $217.7 billion in paid work. These caregivers have an additional annual $9.7 billion in medical costs of their own as a result of the rigors of taking care of Alzheimer's patients.

The cause of Alzheimer's disease is poorly understood, but promising new research offers some hope for our ability to slow or stop the onset of the disease with a non-medical intervention.

Professors Padmaja Ayyagari and David Frisvold of the University of Iowa have just released a National Bureau of Economic Research (NBER) Working Paper entitled "The Impact of Social Security Income on Cognitive Function at Older Ages." The authors employed a so-called natural experiment, where a flawed Social Security benefit formula, enacted in 1972 and corrected in 1977, produced higher benefits for retirees born between 1910 and 1916 than for those born before or after. The result of the flawed formula is that individuals with the same work histories and born within just a few years of one another received higher or lower Social Security benefits as a result of nothing other than when they were born.

Controlling for factors other than year of birth, the authors found "robust evidence that higher Social Security income improves cognitive function among the elderly." What is particularly striking about the results is that the improvement was the result of very modest increases. The size of the yearly benefit increase described in the paper was only an average of $1,160 a year, in 1993 dollars (approximately $1,900 in 2015 dollars).

An additional $1,900 a year might not sound significant to the affluent pundits and policymakers who too often dominate the discourse in Washington. But for millions of retirees around the country, this is a substantial increase. Social Security is virtually the entire income of one-third of Social Security beneficiaries aged 65 and older. And those benefits are low. For all retired workers, they averaged just $1,337 in August, and that is without regard to deductions for Medicare. That is an average gross amount of just around $16,000 a year. An increase of $1,900 amounts to about a 12 percent raise - a substantial increase for people on fixed incomes, just barely getting by.

The amount that the authors found to have a measurable impact on improved cognition is in line with many of the half-dozen or so Social Security expansion bills introduced so far in this session of Congress. These bills all expand benefits while fully paying for those expansions, as well as Social Security's projected shortfall. That is a conservative approach, consistent with the history and tradition of Social Security which requires that Social Security have sufficient income to pay all benefits and related administrative costs, without any borrowing whatsoever. But this narrow focus on income and outgo may miss the larger picture.

If increasing retirees' Social Security income could lead to even a small decrease in the number of new Alzheimer's cases, or a delay in the onset of the disease, it would make an enormous difference in the lives of Americans around the country. Of the 5.3 million Americans with Alzheimer's, 5.1 million are age 65 or older. Moreover, if an increase in Social Security could alleviate some of the costs associated with Alzheimer's, it could very well pay for itself.

This new research provides one more compelling argument in favor of expanding Social Security. In addition to its possible impact in reducing or delaying Alzheimer's and other dementia in some seniors, expanding those modest benefits addresses other serious challenges facing our country. According to the Census Bureau's Supplemental Poverty Measure, nearly half, 48 percent of all those 65 and over, and 58 percent of those aged 80 and over, are either poor or only one economic shock (such as an illness or death of a spouse) away from falling into poverty. Tomorrow's retirees are likely to be even more financially vulnerable, as a result of a looming retirement income crisis brought about by stagnating wages, the decline of defined benefit pensions and the failure of the 401(k) experiment.

Expanding Social Security will lessen the financial burden of working Americans, squeezed between the needs of children and aging parents. And expanding Social Security will slow the upward redistribution of income and wealth, now at heights not seen since before the enactment of Social Security.

Now, thanks to this new research, expanding Social Security is not just a solution; it is an investment. An investment in health, cognition, and overall well-being. An investment that more than pays for itself.

It is time for all our elected leaders to catch up with the American people. Most Republican presidential candidates favor cutting Social Security's modest benefits. They are out of step on this issue, even with their own base.

Fortunately, the movement to expand Social Security's modest benefits is growing larger and stronger. The American public overwhelmingly supports increasing benefits. Forty-three Senators and 116 members of the House of Representatives have come out in support of expanding benefits. Two of the leading Democratic presidential candidates, Bernie Sanders and Martin O'Malley, have enthusiastically endorsed increasing Social Security benefits and released detailed plans doing just that. Hillary Clinton, while not yet releasing a detailed plan, has also made it clear that she supports expanding at least some benefits.

Even without this new research, expanding Social Security is extremely wise and popular policy. The research underscores that it is even wiser policy than its proponents realize. The research underscores how foolish it would be to cut Social Security. Indeed, it convincingly proves why it is now past time to expand Social Security.

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