Old age, Health, Longterm care

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• Old age, Health, Long-term care
• Alberto Holly
• Institute of Health Economics
• and Management (IEMS)
• University of Lausanne
• Prepared for presentation at the Workshop
• Well-being of the Elderly
• ESF FORWARD LOOKS project
• Ageing, Health and Pensions in Europe
• IEMS, University of Lausanne,
• Friday October 24, 2008

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Outline

• Introduction
• Background Demographic and epidemiologic changes
• Policy questions (some)
• Health-related economic issues
• Health care Ageing and the past evolution of
  health care expenditure
• Long-term health care
• Informal care
• Projection of long-term care expenditure

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Introduction

• The declines in fertility reinforced by
  increasing longevity (in good health) have
  produced and will continue to produce
  unprecedented changes in the structure of all
  societies.
• Population ageing is having major consequences
  and implications for a large number of facets of
  human life.

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Introduction

• Not only in the economic area (including
  intergenerational transfers), but also in the
  social area
• Health and health care
• Family composition and living arrangements
• Housing and migration

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Introduction

• This paper will concentrate on
• Health-related economic issues
• Ageing, health care and long-term care
• To this end a solid demographic and epidemiologic
  foundation is needed.

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BACKGROUND DEMOGRAPHIC AND EPIDEMIOLOGIC
CHANGES
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Demographic and epidemiologic changes

• Demographic transition refers to a change in
  birth and death rates
• Presently stable low growth rate where both
  births and deaths rates are low
• Ageing Two concepts often confused
• Ageing of the population Process by which older
  individuals become a proportionally larger share
  of the total population

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Demographic and epidemiologic changes

• Longevity Measured by life expectancy at a
  specific age (at birth, at 65, and at 80)
• Mortality decline, especially at older ages,
  assumes an increasingly important role in
  population ageing
• More people will survive to older ages
• In proportional terms, gains in life expectancy
  are expected to be higher at older ages

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Demographic and epidemiologic changes

• The fastest growing age group in the world is the
  oldest-old, those aged 80 years or older.
• The majority of elder persons are women as female
  life expectancy is higher than that for men.
• Parent support ratio ratio of the population
  85 or older to those aged 50 to 64.
• 2 in 1950 4 in 2000 projected to reach 11 by
  2050.
• More and more people in their fifties and sixties
  are likely to have surviving parents or other
  very old relatives

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Demographic and epidemiologic changes
Improvements in longevity over time
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Demographic and epidemiologic changes

• Evidence concerning recent trends in mobility is
  quite consistent and generally favours the theory
  of compression
• People live longer and in better health on
  average
• Disability-adjusted life expectancy (DALE)
  improving

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Policy questions

• We mention only a few questions at this stage of
  special relevance in terms of public policy, in
  relation to the topics addressed in this paper
  in particular long-term care and informal care
• The rapid growth of the oldest groups among the
  older population and its consequences
• The increasing female share of the older
  population and its consequences.

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Health-related issues in the economics of aging
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Health-related economic issues

• Topics in the Health Economics of Ageing
• Health and Wealth
• understand the explanation for the very strong
  relationship between health and wealth, and in
  particular the direction of causality

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Health-related economic issues

• Housing
• To understand the change in the home equity of
  the household as they age, in particular the
  relationship between changes in home equity and
  changes in health status and in household
  structure.

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Health-related economic issues

• Living arrangements
• Study in the context of European countries
• Transitions to an institution or to the home of
  children
• In particular in connection with the formal and
  informal care issues.

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Health-related economic issues

• Financial status
• Does the death of a husband very often induces
  the poverty of a surviving widow in European
  countries similarly to the US?

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Ageing and health care expenditure
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Ageing and health care expenditure

• Statistical data show, that for any given year
  given (for example 2007), the health expenditure
  increases with age, except for the very old age
  population.
• In particular, the total health expenditure is
  much higher than the average for the elderly of
  more than 65 years.
• Since the population aged 65 years and more will
  strongly increase until 2050 (see for example
  United Nation, 2001) it is often claimed that the
  demographic changes will result in an
  acceleration of the health expenditure.

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Age
Old
Young
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Shifts in expenditure profile pure ageing effect
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Ageing and health care expenditure

• But the reasoning at the base of this assertion
  seems to confuse the notion of correlation with
  that of causality. Its validity deserves to be
  examined more closely.
• One alternative theory End-of-life costs
• But this theory itself is not entirely
  convincing

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Ageing and health care expenditure

• Stability during a long period the ratio of
  health care expenditure between survivors and
  decedents among people of the same age remained
  constant during a more than fifteen years period.
• This tends to show that the health care
  expenditure for these two categories results from
  the effect of common factors

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Comparison of the cost profiles with and without
deceased of the in-patient tariff
Deceased costs
Survivors costs
Groupe dâge
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Shifts in expenditure profile non-ageing drivers
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Ageing and health care expenditure

• One of the main factors is usually identified to
  be the evolution of medical technologies.
• The last years of life express a health status
• The end-of-life costs of the last years reflect
  the costs of health care to which patients
  survive whereas others unfortunately die.

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Ageing and health care expenditure

• Thus, age is not a main driver of health care
  expenditure, neither end-of-life treatments.
• They should be replaced by the medical
  technological advancement and its diffusion in
  the explanation of the evolution of health care
  expenditure.

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• Ageing and long-term care
• Informal care
• Projection of
• long-term care expenditure

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Ageing and long-term care

• Long-term care is care for chronic illness or
  disability instead of treatment of an acute
  illness
• INFORMAL CARE
• The most important source of long-term care in
  all OECD countries
• Its level is a response to a number of factors
• Living arrangements of elderly people,
• Longevity of elderly husbands and wives,
• Trends in the labour market participation of
  those groups in the labour force that are
  informal carers

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Ageing and long-term care

• The bulk of informal care is provided by women
  aged over 45.
• Older persons with care needs who live together
  with their family or partner are more likely to
  receive informal help than those living alone.
• The growth in the number of older people living
  alone will itself increase the demand for formal
  care services in the future.
• Living alone has become a much more frequent
  experience for elderly people in the OECD area.

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Ageing and long-term care

• Depending on
• The institutional setting
• The health status of individuals
• Informal care may be a substitute or a complement
  to other forms of formal long-term services (home
  care and institutions like nursing home)
• A strong bequest motive may also influence the
  demand and supply of informal care.

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Ageing and long-term care

• Informal care has a positive impact on
• Health outcome
• The use of different types of health care
  services, and hence on health care expenses
• Few economic studies written that focus on issues
  specific to non-US countries, or use non-US data.
• The situation has changed only recently, in
  particular with the availability of SHARE data.

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Ageing and long-term care

• Projection of long-term care expenditure
• Demographic only models have serious limitations.
• Demographic projections of ageing populations
  crucially depend on
• The reliability of forecasts of future trends in
  life expectancy in particular of the remaining
  life expectancy at higher ages
• The average health (chronic diseases) and
  disability status at each age,
• The per capita medical spending conditional on
  health (chronic diseases) and disability status,
  which also varies according to age

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Ageing and long-term care

• Importance of the three scenarios regarding
  morbidity compression, extension, dynamic
  equilibrium.
• Long-term care is does not include treatment of
  an acute illness
• age (as an indicator of chronic diseases and
  disability status) may be a driving factor of
  long-term care expenditures.

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CONCLUSIONS
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Conclusions

• Need for more advanced research about
  health-related economic issues from an
  interdisciplinary perspective.
• Informal care and its development is a
  fundamental topic which requires more research
  work. It is important on the health and policy
  agenda.
• Fits to the policy questions suggested above.

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Conclusions

• Projections of health care and long-term care are
  also important research topics from both the
  academic and policy perspectives.
• Requires convincing integration of some aspects
  highlighted in this paper and which have been
  neglected so far in most of the published
  literature on these projections.

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Conclusions

• Requires the development of new research
  infrastructures,
• notably the development of appropriate
  longitudinal data bases, complementary to SHARE,
• allowing for cross-country comparisons at least
  among European countries.