RAND Roybal Center for Health Policy Simulation

The Future Elderly Model

Background

The Future Elderly Model (FEM) was conceived at the RAND Corporation in 1997. It was designed as a tool to help policy analysts and private firms understand future trends in health, health spending, medical technology, and longevity. FEM development has benefited from several rounds of funding, from the Centers for Medicare and Medicaid Services (CMS), the National Institutes of Health (NIH), Pfizer, and the US Department of Labor. Several iterations of the model have already been released in peer-reviewed publications. Further model development continues to be ongoing.

The most recent version of the FEM models trends in health, functional status, health spending, pharmaceutical innovation, labor supply, and earnings for individuals over age 50 in the United States and 7 European countries (Germany, Sweden, the Netherlands, Spain, Italy, France, and Denmark).

History of the FEM

Phase I: CMS Project

The initial funding for the FEM came from CMS, the US government agency that administers the Medicare system, and guides the state-level Medicaid systems. CMS provided approximately $1.5 million to develop a model that would assist the trustees of Medicare in analyzing the impact of new medical technologies on the future health, longevity, and health spending of Medicare beneficiaries in the US.

As part of the CMS project, RAND convened a panel of medical experts and elicited their opinions on likely breakthroughs in future medical technology, particularly their likely effects on health and their costs. At the same time, RAND built a sophisticated microsimulation model for the US population over age 65, designed to project trends in health, and the impact of new technologies on those trends.

The output of the CMS project was a special issue of the journal Health Affairs (published on September 26, 2005), devoted exclusively to the FEM and its findings.

Phase II: Pfizer Global Pharmaceutical Policy Project

Pfizer funded a $2 million extension of the FEM. Under this project, pharmaceutical innovation, pharmaceutical demand, and the effects of innovation on future health were all built into the model. In addition, the model was expanded to include 7 European countries, and to include the entire population over the age of 50.

The output of this ongoing project will be a series of papers evaluating the future health, spending, and mortality impacts of changes in global pharmaceutical policy, in the United States and Europe.

Phase III: NIH Project

NIH has funded continued development of the Future Elderly Model under a 5-year grant of approximately $1.5 million to create the RAND Roybal Center for Health Policy Simulation.

Phase IV: US Department of Labor Module on Retirement, Employment, and Earnings

The US Department of Labor has recently provided $250,000 for an extension of the FEM that will include forecasts of retirement, labor supply, and earnings among the population over age 50. The output of this project will be a report submitted to the Department of Labor.