to 67, the benefit multiple increases—as one would expect.
Under the first scenario, assuming no improvement in mortality, the relative increase is 13 percent for men in the higher
socioeconomic group and 15 percent for men in the lower socio-economic group, suggesting that the benefit multiple for those
with higher mortality should be increased more than for those
with lower mortality. Some change in the benefit accrual formula by income level, therefore, would seem desirable if the
age of eligibility is increased.
The effect persists in the second and third scenarios, although not quite to the same level. Under the fourth scenario,
the effect of the convergence that occurs from the assumption
of double relative improvement for the lower socioeconomic
group removes the need to make any adjustment.
Negotiating the Crossroads
If you visit Moorhead, Miss., these days, you will find the Yazoo
and Delta (the Yellow Dog) still using its track, as the Columbus and Greenville line. But the Southern (subsequently part
of the Illinois Central line) no longer runs through Moorhead.
Although a bit of its track remains—including the crossing—it’s
of historical interest only.
It’s a reasonable bet that increasing the age of eligibility
similarly will become the dominant argument in discussions
on retirement policy. It would be nice to think, however, that
any issues of potential unfairness will be mitigated as the result of significant investments in improving health and other
factors affecting mortality for those with lower socioeconomic
status. Or that when retirement age eventually is increased,
some recognition will be made of the impact of socioeconomic
differences in mortality through income-related adjustments
to pension entitlements.
GEOFF RASHBROOKE is a senior associate at the Institute of
Policy Studies, victoria university of Wellington, in New zealand.
This article is adapted from a presentation given at the SOA 2011 Living
to 100 and Beyond International Symposium, which was held Jan. 5-7 in
Orlando, Fla. ( http://livingto100.soa.org). This article is solely the opinion
of its author. It does not express the official policy of the American Academy
of Actuaries; nor does it necessarily reflect the opinions of the Academy’s
individual officers, members, or staff.
Resources
Blakely, T., M. Tobias, J. Atkinson, L-C Yeh, and K. Huang, “Tracking
Disparity: Trends in Ethnic and Socio-economic Inequalities in Mortality,
1981-2004,” Public Health Intelligence Occasional Bulletin No. 38,
Wellington, N.Z. Ministry of Health
Monk, Courtney, John A. Turner, and Natalia A. Zhivan, “Adjusting social
security for increasing life expectancy: Effects on progressivity” (2010),
Working Paper 2010-9, Center for Retirement Research, Boston http://
crr.bc.edu/working_papers/adjusting_social_security_for_increasing_life_
expectancy_effects_on_progressivity.html
Whitehouse, Edward R., and Asghar Zaidi, “Socio-economic differences
in mortality: Implications for pensions policy” (2008), OECD Social,
Employment and Migration Working Papers No. 71, Paris, OECD http://
ideas.repec.org/p/oec/elsaab/71-en.html
Announcing a new release in the
ACTEX Professional Series
from author, Ian Duncan.
Healthcare Risk Adjustment and Predictive Modeling
Stop by and see us in
Chicago at this year’s
SOA Meeting!
Booth #302
Meet Ian Duncan and
purchase his new book
at a discount!
This text will be listed on the Course of Reading
for SOA Fellowship study in the Group & Health
specialty beginning in 2012.
About the Text
Healthcare Risk Adjustment and Predictive Modeling
provides a comprehensive guide to healthcare actuaries
and other professionals interested in healthcare data
analytics, risk adjustment and predictive modeling.
The book first introduces the topic with discussions
of health risk, available data, clinical identification
algorithms for diagnostic grouping and the use of
grouper models. The second part of the book presents
the concept of data mining and some of the common
approaches used by modelers. The third and final
section covers a number of predictive modeling and
risk adjustment case-studies, with examples from
Medicaid, Medicare, d isability, depression diagnosis
and provider reimbursement, as well as the use of
predictive modeling and risk adjustment outside the
United States. For readers who wish to experiment
with their own models, the book also provides access
to a test dataset.
ACTEX Publications
The Experts in Actuarial Career Advancement
www.ActexMadRiver.com
For a complete listing with details on all our products, please
visit our website.
800-282-2839 860-379-5470 |
