December 19, 2002

Payments to Seniors Continues to Fuel Growth in Transfer Payments

North Dakotans received nearly $2.7 billion in transfer payments in 2001, an increase of 4.7 percent from the $2.5 billion paid in 2000 according to the recent Economic Brief released from the North Dakota State Data Center at North Dakota State University. Transfer payments are income received by individuals for which they did not render services. They are payments by government and business to individuals and nonprofit institutions serving individuals.

"Much of the increase in transfer payments is a function of our state’s growing senior population. Currently, 14.7 percent of North Dakota residents are 65 years or older. This proportion is expected to jump to 17 percent by 2010," said Richard Rathge, director of the State Data Center.

Of total transfer payments, 95 percent were government payments to individuals. Retirement and disability payments accounted for slightly less than half of these individual payments in 2001. Retirement payments amounted to $1.23 billion, an increase of 4.7 percent from the $1.18 billion in 2000. Medical payments (consisting of Medicare, medicaid and other medical vendor payments, and military medical payments) accounted for 38 percent of the state’s total transfers to individuals. Nearly $960 million was paid to North Dakotans in 2001 in medical payments, an increase of 3 percent from the $973 million paid in 2000.

Medical payments are continuing to comprise a growing portion of total transfer payments. In the early 1970s, medical payments accounted for approximately 20 percent of all transfer payments. That proportion has doubled and likely will continue to grow as an increasing number of elderly require more medical services.

Income maintenance programs (such as supplementary security income, family assistance, and food stamps) comprised the third largest category of individual transfer payments accounting for 6.6 percent of the state’s individual transfers. Income maintenance payments rose to $168 million in 2001, an increase of 6.7 percent from 2000. The remaining 7 percent of North Dakota’s individual transfers included unemployment insurance benefit payments, veterans benefit payments, and federal education training and assistance payments.

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Source: Richard Rathge, (701) 231-8621, richard.rathge@ndsu.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu

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