Covid-19 Reduces U.S. Life Expectancy

The Covid-19 pandemic may have shortened older Americans’ lives enough to throw off mortality forecasts for life insurance, annuity, and pension providers.

An arm of the U.S. Centers for Disease Control and Prevention (CDC) is reporting, based on early data, that overall life expectancy at birth dropped by 1.5 years between 2019 and 2020, to 77.3 years. For U.S. residents who are currently 65 years old, life expectancy fell by 0.8 years, to 18.8 additional years. The drop at age 65 was about the same for men and women.

This means that the average person who turned 65 in the United States last year might have a lifespan that’s about 4 percent shorter than the lifespan of someone who turned 65 in 2019.

A comparison of the CDC’s new life expectancy figures for people in specific demographic groups with similar figures published for 2017 suggests that the impact of Covid-19 and other problems on Black and Hispanic Americans has been especially devastating. Life expectancy at age 65 fell an average of 0.5 years between 2017 and 2020 for non-Hispanic White people, 1.5 years for Black people, and 1.6 years for Hispanic people. Black men who were 65 in 2020 could expect to live only 14.7 more years. That’s the same as the life expectancy for all U.S. 65-year-old men in 1988.

The overall drop in life expectancy for U.S. 65-year-olds appears to be the first year-over-year drop greater than 0.2 years since at least 1980, according to the new report and to CDC reports published in 2011, 2017, and March of this year. The largest life expectancy increases recorded between 1980 and the present amounted to 0.3 years.

Why Actuarial Life Expectancy Estimates Matter

U.S. life insurers sell many policies to working-age people. Decreases in life expectancy at birth may hurt the performance of life insurance policies. U.S. life insurers also sell many individual annuities, group annuities, and life insurance policies designed to help people over 65 generate income in retirement or pay for long-term care.

Decreasing life expectancy at age 65 may increase insurer spending on any death benefits those products offer, but it may also cut insurer spending on retirement income benefits and on benefits used to pay for long-term care.

Decreasing life expectancy at age 65 also may cut U.S. federal government spending on Medicare and Social Security.

Understanding what is really happening to life expectancy for users of specific private or public programs, such as Social Security, can take decades because getting complete data often takes time, and the characteristics of the people who use certain kinds of arrangements vary widely.

Reasons

The CDC life expectancy analysts did not discuss the reasons for 2020 life expectancy changes for specific age groups.

Covid-19 affected life expectancy in 2020 by killing people directly. Pandemic-related changes also disrupted the healthcare system and forced people to spend much more time at home.

The analysts included charts showing that, for the U.S. population as a whole, Covid-19 caused a drop in life expectancy at birth in 2020 equal to about 74 percent of the overall 1.5-year decrease, and that unintentional injuries caused a drop equal to about 11 percent of the 1.5-year decrease. Other factors leading to decreases in life expectancy included homicide, diabetes, and liver disease.

Factors pushing life expectancy higher in 2020 included apparent improvements in the death rates for cancer, chronic lower respiratory disease, and Alzheimer’s disease. The apparent improvements in the death rates for those diseases could be a sign that Covid-19 killed some people who otherwise would have died from those ailments, or that doctors chose to attribute to Covid-19 some deaths of people suffering from multiple health problems.

From: ThinkAdvisor