As Americans die younger, corporations to reap billions in pension costs

By Kate Randall
11 August 2017

Life expectancy for Americans has stalled and reversed in recent years, ending decades of improvement. According to a new Bloomberg study, this grim reality has an upside for US corporations, saving them billions in pension and other retirement obligations owed to workers who are dying at younger ages.

In 2015, the American death rate rose slightly for the first time since 1999, according to data from the Centers for Disease Control and Prevention (CDC). Over the last two years, at least 12 large companies have reported that negative trends in mortality have led them to reduce their estimates for how much they could owe to retirees by a combined $9.7 billion, according to Bloomberg’s analysis of company filings.

It is highly unusual in modern times, except under epidemic or war conditions, for life expectancy in an industrial country to stop improving, let alone decline. Laudan Aron, a demographer at the Urban Institute, told Bloomberg that falling US life expectancy, especially when compared to other high-income countries, should be “as urgent a national issue as any other that’s on our national agenda.”

But this has not sounded alarm bells in Washington. In fact, shortened life expectancy in the 21st century is the result of deliberate government policy of both big business parties: to restrict access to affordable health care, resulting in increased disease, suffering and early death.

Those who stand to cash in on the shortened lifespans of workers include General Motors, Verizon and other giant corporations. Lockheed Martin, for instance, has reduced its estimated retirement obligations for 2015 and 2016 by a total of about $1.6 billion, according to a recent annual report.

Companies have reduced estimates of what they will owe future retirees. According to a Society of Actuaries (SOA) report, companies can expect to lower their pension obligations by about 1.5 to 2 percent, based on a 2016 update of mortality data.

Life expectancy for the US population was 78.8 in 2015, a decrease of 0.1 year from 2014, according to the CDC, with the age-adjusted death rate increasing 1.2 percent over the year. Since the introduction in 1965 of Medicare and Medicaid—the government insurance programs for the elderly, poor and disabled—US life expectancy has steadily increased.

Death rates for Americans over age 50 have improved by 1 percent on average each year since 1950, according the SOA. In 1970, a 65-year-old American could expect to live another 15.2 years, on average, until just past 80 years.

From 2000 to 2009, the death rates for Americans over age 50 decreased, with annual improvements of 1.5 to 2 percent. By 2010, a 65-year-old could expect to live to 84. But these increases have slowed in recent years, with life expectancy at 65 rising only about four months between 2010 and 2015.

The slowing in death rate improvements since 2010, and the actual lowering of life expectancy in 2015, have followed the global financial crash of 2007-2008. Despite the Obama administration’s declaration that the Great Recession ended mid-2009, millions of US workers and their families continue to suffer under the weight of unemployment, underemployment, and stagnant or falling wages.

Seven years after the Affordable Care Act was signed into law, a staggering 28 million Americans remain uninsured. Those who are insured have seen their premiums, deductibles and other out-of-pocket costs skyrocket. Families are saddled with billions of dollars in medical debt.

The lack of access to affordable health care is resulting in an unprecedented health crisis in the US. A 2015 study showed that mortality was rising for middle-aged white Americans, with deaths from suicides, drug overdoses and alcohol, collectively referred to as “ deaths of despair.” Both women and men have been affected by this phenomenon.

CDC data shows that more than 500,000 Americans have died of drug overdoses in the period between 2000 and 2015, now approaching an average of 60,000 a year.

The 10 leading causes of death in 2015 were heart disease, cancer, chronic lower respiratory diseases, unintentional injuries, stroke, Alzheimer’s disease, diabetes, influenza and pneumonia, kidney disease, and suicide, according the CDC. Despite scientific advances in medical treatment and the development of new drugs to treat these diseases and conditions, they still accounted for 74.3 of all US deaths in 2015.

Moreover, from 2014 to 2015, age-adjusted death rates increased 0.9 percent for heart disease, 2.7 percent for chronic lower respiratory diseases, 6.7 percent for unintentional injuries, 3 percent for stroke, 15.7 percent for Alzheimer’s disease, 1.9 percent for diabetes, 1.5 percent for kidney disease, and 2.3 percent for suicide. Only cancer saw a reduction, of 1.7 percent.

It is on the backs of workers dying earlier from these diseases, alongside “deaths of despair,” that US corporations now stand to save billions, increasing their bottom lines by not paying out pensions and retirement benefits.

This is by design. Obamacare was the first significant effort to reduce the trend of increasing life expectancy by shifting the costs of medical care from the corporations and government to the working class. The ACA was drafted in close consultation with the insurance industry, requiring those without insurance to purchase coverage from private insurers under the threat of tax penalty.

The ACA set into motion the rationing of health care for ordinary Americans, making vitally needed treatments and medicines increasingly inaccessible for millions. This has now borne fruit in the first reduction in US life expectancy in more than half a century.

Following the Republicans’ failure to “repeal and replace” Obamacare, the Democrats have responded by offering to work with the Republicans to “repair” the ACA. But they do not mean reducing the number of uninsured or further expanding Medicaid.

Instead they have offered a five-point plan to shore up the insurance companies by setting up a “stability fund” for companies to insure high-risk enrollees, and guaranteeing they receive $8 billion in government cost-sharing payments to the insurance firms that the Trump administration has threatened to cut off.

Such measures, along with savings from unpaid retirement benefits, will further bloat corporate profits along with those of the private insurance companies and health care industry as a whole.

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Rising death rate for middle-aged US workers driven by “deaths of despair”

By Niles Niemuth
24 March 2017

The latest research on rising mortality rates by Princeton University economists Anne Case and Angus Deaton, presented this week at the Brookings Institution, shines new light on the depth of the social crisis which has devastated the American working class since the year 2000.

Building off their initial 2015 study which documented a sharp rise in the mortality rate for white, middle-aged working-class Americans, Case and Deaton conclude that the rising death rate is being driven by what they define as “deaths of despair,” those due to drug overdoses, complications from alcohol and suicide. The mortality rate for these causes grew by half a percent annually between 1999 and 2013.

During the course of the 20th century, the annual mortality rate for all middle-aged whites fell from 1,400 per 100,000 to 400 per 100,000. The US experienced a 100-year period of almost uninterrupted improvements in death rates and life expectancy. In this context Case and Deaton identify the recent rise in middle-aged mortality as “extraordinary and unanticipated.”

Midlife deaths of despair across countries

The epidemic of deaths from drugs, alcohol and suicide was initially seen in the American Southwest in the year 2000 but soon spread to the Appalachian region and Florida and is now nationwide, affecting rural and urban areas alike.

While every region of the US has seen an increase in the rate of “deaths of despair” among middle-aged whites over the last 15 years, the hardest-hit states are in the South (Alabama, Kentucky, Tennessee and Mississippi). Large urban and suburban areas have been the least affected, rural areas the most.

The mortality rate for working-class whites was also pushed up by a slowing and then stagnation of the decline in deaths from heart disease for white Americans between 2009 and 2015. On top of this the decline in mortality from lung cancer, caused by smoking and occupational hazards, slowed for white men 45-54 between 2000 and 2014, while mortality actually increased for white women 45-49 between 2000 and 2010.

Case and Deaton found that midlife mortality for middle-aged, working-class, white Americans surpassed the midlife mortality for all African Americans for the first time in 2008, and by 2015 mortality for working-class whites was 30 percent higher than for blacks. More significantly, their data shows that the gap in mortality between whites and blacks in the working class has all but disappeared. This is the outcome of a general decline in mortality for blacks and a rapid increase for whites over the last decade-and-a-half, though in recent years the mortality rate for working-class blacks has begun rising along with that of whites.

Case and Deaton’s report is supported by the most recent Centers for Disease Control (CDC) data concerning suicides and overdoses.

The CDC found that after declining between 1986 and 1999 the US suicide rate rose gradually between 2000 and 2015, with the rate growing most rapidly in smaller cities and rural areas after the 2007-2008 economic collapse. Whites and Native Americans had the highest suicide rates, with both groups seeing noticeable increases. All told there were 600,000 suicides in the US between 1999 and 2015—the equivalent of the loss of a major city, more than the total estimated deaths in the Syrian civil war.

Another recent CDC report found that overdoses from all drugs has more than doubled since 1999, with middle-aged Americans having the highest rate of overdoses. The overdose rate for whites has more than tripled since 1999 and is now more than double the rate for blacks and Hispanics combined. Nearly 13,000 people died from heroin overdoses alone in 2015, more than four times the number of deaths recorded in 2010.

Midlife mortality by all causes in the US

The data collected and analyzed by Case and Deaton reflects a deeply sick society, the outcome of a social counterrevolution which has accelerated since the 2008 crash.

Their research makes clear that the American working class, regardless of race, is being made to pay the price for the failure of capitalism, exposing the lie repeated by pseudo-left groups and the practitioners of identity politics about the “privileged white working class.”

In the period reviewed by Case and Deaton, the Democratic Party completed its repudiation of a political program which in any way addressed the needs or interests of the working class, in favor of middle-class identity politics. This found its culmination in the election of Barack Obama, the first black president, who funneled trillions of dollars into Wall Street and expanded the wars in the Middle East. In the last year of his presidency, which had seen such catastrophes as the lead poisoning of Flint and the BP oil spill, and seven years of wage stagnation, Obama asserted that things were “pretty darn great” in America.

The immiseration of the American working class has also been made possible by betrayals of the trade unions which over the last four decades have collaborated with and integrated themselves ever more closely with the corporations in order to shutter factories, eliminate jobs and enforce wage and benefit cuts.

The period in which the American working class has been subjected to unrelenting attacks has seen the growth of historically unprecedented levels of social inequality. The resources of society and the wealth created by the working class have been plundered and funneled into the hands of an ever wealthier financial aristocracy. This process will only accelerate under Trump.

While it is claimed there is “no money” to pay for decent wages or social services in the US, the country claims eight of the world’s 10 wealthiest billionaires and spends more than the next seven countries combined on its military. The health care overhaul and budget cuts being proposed by the Trump administration are guaranteed to accelerate the social counterrevolution.

In this regard it is striking to note the overlap between the areas of the country particularly devastated by “deaths of despair” in the period examined by Case and Deaton and those with a large vote for Donald Trump in the 2016 election. The anti-working class policies pursued in the Obama years paved the way for Trump.

The residents of these areas, either rural or devastated by years of factory closures, voted for Trump not out of racial animus—an assertion often made by the mainstream media and pseudo-left—but as a cry of desperation, incipient anger and complete disgust with the political establishment.

These people have been at the frontlines of the onslaught against the working class, facilitated by Democrats and Republicans alike. As far as Trump identified himself as an outsider, opposed to the political establishment which facilitated the plunder of the working class, he drew significant support. These same working people are quickly being disabused of any illusions they may have held in the billionaire businessman.

The fundamental question raised by Case and Deaton’s research is the struggle of the working class against the capitalist system and for socialism. Social inequality has never been higher and the rich have never been richer. The working class is the only force which can reverse this counterrevolution. Workers must turn to socialism and fight to build a mass independent movement which will fight for political power and take control of the wealth plundered from them, putting it to use for the common good.

 

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