Aging workforce and the impact on drug spend

The first Baby Boomers began to turn 65 in 2011. In the years since, the percentage of Americans aged 65 and older has grown by more than one third – to nearly 17% of the population.⁴

But aside from their percentage of the population, the reason we’re interested in the Boomers here is that so many of them are still working.

There are several powerful forces keeping older workers on the job:

They need the money

Old-style pensions have largely disappeared. They’ve been replaced by personal savings or contributory investment plans, like 401(k)s.⁵ However, in 2023 the median value (half larger, half smaller) of 401(k) balances for those age 65 and older was only $88,488.⁶ That amount might last about 9 years if you withdrew just $1,000 per month.⁷

Changes to Social Security

These changes have pushed back the age when workers can claim their full retirement benefits – from 65 to 67. Economists believe this has encouraged people to delay retirement and continue working.⁸  

The economy is more age friendly

Since 1990, the modern economy has become more age friendly for older workers. Fewer jobs require sheer physical stamina instead of thinking skills, and flexible schedules are more common, for example.⁹

On the demand side, hiring managers are waking up to the fact that they are running short of the kind of skilled, educated workers they need to drive growth.¹⁰ One of the main reasons is that Gen X – the generation that came after the Boomers – is a much smaller cohort. There simply aren’t enough of them to fill the jobs opened by retiring Baby Boomers.¹¹

The bottom line is that 30 years ago only 12% of workers in the U.S. expected to work past age 65. Today we find that 66% of those age 60 and over expect to either keep working past age 65 or never retire at all.¹²

There are a multitude of issues surrounding the rise of the “multigenerational workforce.” Everything from cross-cultural integration to job re-design, and the value of critical thinking skills among older workers has attracted intensive research.^{13, 14, 15}

But we are interested in a simple question: Will older workers increase drug spend?

While there is plenty of data about drug costs among the Medicare population, there’s no readily available data concerning drug spending among full time employees aged 65 and over. Accordingly, for now we can only make some general observations. These center around three issues: prescription medications for chronic conditions, polypharmacy in older adults and how long seniors may actually spend working.

Prescription medications for chronic conditions

By age 60, most Americans are taking at least one prescription medication for chronic conditions like high blood pressure, high cholesterol or diabetes.¹⁶

We may be seeing why there isn’t a lot of data about the cost of prescription drugs for older workers. Of course, seniors who are healthy enough to work will inevitably incur drug costs, just like everyone else. But their costs appear relatively low, like for statins or ACE inhibitors.

Once the biological clock begins to chime-in more serious conditions, people appear to simply retire and join Medicare to deal with them. There are obvious exceptions –  older workers who receive a costly specialty biologic drug or gene therapies. But these are rare across the board – only 2% or so of all claims.²⁵

In short, it seems like a case of the dog that didn’t bark. With 10,000 Boomers turning 65 every day since 2011, we’d expect any dramatic surge in drug spend to have shown up by now. The fact that no one is talking about it says a lot.