Sarita A. Mohanty, MD, MPH, MBA, serves as the President and Chief Executive Officer of The SCAN Foundation.
This year marks the 60th anniversaries of three cornerstone programs that have shaped aging in America—Medicare, Medicaid and the Older Americans Act (OAA). Signed into law in 1965 with bipartisan support, these initiatives have improved health outcomes, expanded access to care and supported older adults, people with disabilities, pregnant women and children. As the number of Americans over the age of 65 grows from 54 million in 2020 to a projected 80 million by 2040, their role could become increasingly essential.
While these programs have strengthened the safety net and quality of life for aging Americans, what’s often overlooked is their role as powerful economic drivers. Together, Medicare, Medicaid and the OAA help low-income older adults maintain their health, independence and financial security.
Diving Into The Data
Medicare provides health coverage for older adults, while Medicaid fills coverage gaps and pays for critical long-term services and supports. In addition to the health benefits it provides to older adults, Medicare serves as an economic driver. It is estimated that in 2019, Medicare financed 3.7 million jobs and created $71 billion in federal tax revenue.
The OAA helps prevent or delay the need for Medicaid by funding services older adults and their caregivers need to stay at home and in the community, such as home-delivered meals, caregiver training and limited in-home personal care. Almost 40% of people served by OAA programs live at or below the poverty line, and every dollar invested in services through the OAA generates a $3.39 return on investment.
Investing in home and community-based services saves on costly acute care, keeps caregivers in the workforce, enhances quality of life and strengthens the economy through a healthier older population. AARP estimates that adults aged 50 and above contribute $8.3 trillion to the U.S. economy each year, accounting for 40% of the U.S. gross domestic product (GDP).
These programs also support individual financial stability. Previous “Medicaid expansion led to reductions in unpaid bills and medical debt, which translated to improved credit scores and reduced rates of bankruptcy.” Additionally, “A study of 5 million credit reports found that medical debt decreased by 12 percent in Medicaid expansion states compared to a decrease of 1 percent in non-expansion states.” Medicaid enrollees had lower medical debt of $3.4 billion in the first two years of Medicaid expansion, resulting in better credit terms—that is worth $520 million per year to the economy.
At the state level, Medicaid expansion revitalized local economies. Take Montana, for example: Between 2018 and 2020, Medicaid expansion brought more than $600 million into Montana, generated between 5,900 and 7,500 jobs, and resulted between $350 million and $385 million in personal income.
And even though the OAA has offered some caregiving support to families, allowing some family members to remain in the workforce, it hasn’t been enough. AARP found that nearly 1 in 5 (19%) Americans are providing unpaid care to an adult with health or functional needs.
Taking the time to provide care for family and friends has a significant impact, such as lost wages due to caregiving. The American economy is also affected. And based on data from 2015, researchers found “caregiving reduced work productivity by one-third on average-or an estimated $5600 per employee when annualized across all employed caregivers-primarily because of reduced performance while present at work.” As America continues to age, these losses could increase unless policymakers prioritize a sustainable and high-quality public long-term care financing system.
Recent Threats
Recent congressional changes threaten to cut nearly $1 trillion from Medicaid, a move that could have a ripple effect on federal, state and local economies.
Analysis in the Journal of the American Medical Association estimates that “by 2034, annual economic impacts are estimated to reach 302,000 jobs lost and $135.3 billion in reduced economic output, leading to $11.1 billion in annual state and local tax revenue reductions. Coverage losses could generate $7.6 billion in medical debt, triggering a further $3.8 billion reduction in economic activity.”
These cuts could disproportionately impact economies in rural communities, which often already face harsher financial circumstances than urban and suburban areas. Rural hospitals and health systems comprise approximately 35% of all hospitals nationwide, and on average, they account for 14% of total employment in rural communities across the country.
Looking Ahead: The Next 60 Years
As these programs enter their seventh decade, the aging Baby Boom generation will likely increase demand for long-term care, community supports and tailored healthcare. Strategic investment in Medicare, Medicaid and the OAA is not only fiscally prudent—it can drive cost savings by lowering hospitalizations and delaying nursing home placements, preserve assets and strengthen local economies.
Now is the time to protect these programs while also reimagining and improving them to meet the evolving needs of an aging population. A key priority is expanding public solutions for older adults who don’t qualify for Medicaid but still face significant long-term care needs.
For business leaders, the lesson is clear: Healthy, financially secure older adults strengthen markets, workplaces and communities.
Inadequate healthcare coverage and limited access to long-term services and supports (LTSS) don’t just affect older adults; they hit businesses and the workforce. When employees delay retirement to keep health benefits, companies face succession challenges. Younger workers often face fewer opportunities, which can harm retention and morale.
Financial instability among older adults also reduces their purchasing power, thereby shrinking demand for products and services specifically designed for this large demographic. For consumer-facing industries, that means lost revenue and growth.
Employers pay a steep price when family caregivers reduce or leave their work. Productivity often falls, recruitment and training costs rise, and skill gaps widen. Without stronger Medicaid-funded services and home- and community-based supports, businesses absorb hidden costs in talent, revenue and competitiveness.
Ensuring these supports isn’t just a social imperative—it’s an economic one. As we mark 60 years of impact, I think the question is not whether we can afford to sustain Medicare, Medicaid and the OAA, but whether we can afford not to.
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