Title: Trends in Aging Economics of Aging and Health Care: Benefits and Challenges of an Aging Population
1Trends in AgingEconomics of Aging and Health
Care Benefits and Challenges of an Aging
Population
- Larry Polivka, Ph.D.
- SCAN Meeting
- Sarasota, FL
- February 22, 2007
2Cost Effectiveness of Health CareInnovations
Since 1950
- Heart disease care/reduced mortality (50 since
1970) - The cost of care for heart disease is now 5,000
for each additional year of life/50,000 in 1980 - But, the cost of health care innovations/
biomedical technology will continue to drive up
health care costs at 2/3 times CPI - The overall cost of health care for each
additional year of life is about 60,000 for
under 65 and 150,000 for 65 (D. Cutler)
3Cost Effectiveness of Health Care (contd)
- Is this a problem? What happens if health care
becomes 25 of the economy? - What is wrong with a huge health care sector if
overall health status continues to improve and
the overall economy continues to grow? - Florida benefits considerably from a large
retiree population and a growing health care
sectortourism, agriculture, health care
4Economic Benefits to Florida
- Retirees pour more than 4/5 times as much into
the Florida economy (purchases, taxes, fees) as
they consume in publicly supported health care
and social services (Fishkind, 2000). - Floridas retirees are generally healthier and
more affluent than the national average. - They represent a very substantial pool of
volunteers and workers (part-time, full-time). - Employers need to be flexible to take advantage
of this labor pool, which has potential to reduce
future labor shortages. - Employers also need to be aware of the caregiving
(for older relatives) obligations of their older
and younger workers.
5Costs Now and in the Future
- The aging of the population is not nearly
(15-20) as important a health care cost factor
as technological innovations, except for
long-term care - But, rising health care costs are a major concern
for many older persons who now spend 22 of
income for medical care (10 in 1988) - This is projected to rise to 35/40 by 2030
6Costs Now and in the Future (contd)
- Rising health care costs probably represent a
greater threat to retirement security than
pensions and savings shortfalls. - The EBRI now projects that future retirees will
need 200,000 in savings/investments to cover
out-of-pocket health care costs.
7Costs Now and in the Future (contd)
- But, future retirees are likely to need less
health care due to improving health status and
lower functional impairment levelsabout a 20
drop since 1984. - This is a major quality of life and health care
cost benefit.
8Costs Now and in the Future (contd)
- Health care costs, however, will outstrip the
reduced need for care and create substantial
challenges for both government and
individuals/families - Medicare is facing a 25/30 trillion shortfall
over the next 50/75 yearsmore with Part D - Medicaid (LTC) is the fastest growing part of
many state budgets (10/20 annually) - Health insurance costs for employers and
employees are increasing 2/3 times the CPI - Retirees (Medicare) have high out-of-pocket costs
and they will increase substantially in the future
9C/E of Health Care Innovations (contd)
- Increasing efficiency would help improve quality
of care, but not much to contain costs (half get
the care they should) - Better, more extensive patient information
systems - Better technology review
- More medical effectiveness outcomes research and
research-based reimbursement procedures (pay for
quality) - More HCB LTC, less dependence on costly nursing
home care and more LTC insurance - Reduced disparities in access to quality care
- These increased efficiencies will both reduce
(HCBLTC, fewer ineffective procedures) and
increase (reduced disparities, increased access)
costs
10Health Care Reform Access, Quality, Costs
- Managed care organizations failed to contain
costs permanently and raised concerns about
access and quality, but they are still doing very
wellmost people in HMOs/PPOs and Medicare
Advantageis increasing (19) - Competitive markets rarely function well in
health care (information and infrastructure
problems) - Employers are increasingly unable to bear rising
health care costsmore costs borne by employees - HSAs are unlikely to contain costs and are likely
to disadvantage the sickest and least
affluentthe 10/70 issuebut may improve
availability of comparative cost and outcome
information
11Health Care Reform (contd)
- How will retirees be able to absorb 35/40
out-of-pocket costs? - How will we cover uninsured/underinsuredthe
Massachusetts program, California plan, Bush tax
incentives? - How and to what extent do we want to constrain
technological innovations? - Other developed countries pay far less for health
care (our prices are much higher) and get better
outcomes. - So, what are our options? HSAs, state reform
initiatives and 2008 presidential campaign