Aging and the market in the United States

Current Social Security reform proposals in the United States presume that, as long as the cash income of future retirees is secure, private businesses will take care of producing just the goods and services an aging population requires. However, the performance of private nursing homes, assisted-living complexes, pharmaceuticals, health, insurance, and transportation services for the elderly raises serious questions about the ability of markets to cater to the needs of a vulnerable population. Industries that specialize in goods and services for the old face repeated accusations of fraud, overcharging, poor service, and deceptive practices. The article reports on research on the performance of a number of industries that serve the aged. A careful look at these markets should caution us against relying too heavily on private markets to serve an aging population. The surplus funds flowing into Social Security might be better employed financing the kinds of public services for the elderly that private markets have so far failed to deliver.