The U.S. government will need to spend an additional $940 billion—or 4.4% of its GDP—on costs primarily associated with an aging population by 2025, according to estimates from Oxford Economics in a report published recently by Accenture (NYSE:ACN).
“The primary driver of the projected expenditure increase is an aging U.S. population,” says Accenture in the report, Delivering Public Service for the Future: Navigating the Shifts. “Currently, 93% of those over 65 are on Medicare, which alone is estimated to cost more than $500 billion in federal spending in fiscal year 2013. Other factors in the analysis included wealth effects—assumptions based on historical evidence that suggests as countries get richer, governments spend proportionally more per person on public health services.”
Overall, costs of delivering public services in the U.S. are expected to reach $7.3 trillion by 2025, accounting for 34% of GDP.
Written by Alyssa Gerace