Comisión Nacional de Seguros y Fianzas Seminario Internacional · Comisión Nacional de Seguros y...
Transcript of Comisión Nacional de Seguros y Fianzas Seminario Internacional · Comisión Nacional de Seguros y...
Healthcare and Population Aging
Comisión Nacional de Seguros y FianzasSeminario Internacional
Mexico D.F.10 – 11 Noviembre 2003
Howard J. Bolnick, FSA, MAAA, HonFIAPresidente, Sección de Salud, AAI
Healthcare and Population Aging
• The Present An International Comparison – Mexico’s Healthcare Attainment
• The Future Aging Population and Other Key Healthcare Cost Drivers
• Policy Options for Mexico Is a Mixed Public – Private Healthcare Financing System in Mexico’s Future?
Healthcare Spending and Wealth
Wealth vs. Health Care Spending, 2000
0
2
4
6
8
10
12
14
$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000
GDP Per Capita ($US PPP)
% G
DP
Spen
d on
Hea
lth C
are
• Healthcare spending increases with national wealth
• Healthcare spending increases with personal wealth
• Mexico - $8,944 US GDP per capita- Healthcare = 5.4% of GDP
• Mexico’s spending in less than 5.7% predicted by trend line
Health vs. Healthcare Spending
• Population health (HALE) improves significantly with additional spending until spending reaches about $1000 US (PPP)
• Mexico - $483 US healthcare spending- 63.8 HALE
• Mexico has better than expected HALE for its current healthcare spending
Health vs. Spending, 2000
20
30
40
50
60
70
80
$0 $1,000 $2,000 $3,000 $4,000 $5,000
Total Health Care Spending ($US PPP)
HA
LE (Y
ears
)
Public vs. Private Healthcare Spending
Healthcare Spending by Source
$224
$239
$20
$483
$517
$0
$200
$400
$600
$800
$1,000
$1,200
$US
(PPP
)
Public
OOPInsurance
Growth Potential to World-Class HALE
• Mexico’s public spending of 46.4% of total is very low by international standards
• Mexico’s level of private healthcare insurance is also very low
• Healthcare spending will need to more than double to reach world-class HALE of 70 years
• Will this large increase be in public or private spending?
Mexico – Intermediate Term Predictions (Next 10 to 15 years)
• Healthcare spending will increase faster than GDP growth
• Growth in demand will come mainly from growing middle income population
• As spending approaches $1000 US per person, HALE will approach 70.0 years
• Public sector spending will be hard-pressed to keep up with demand creating opportunity for private sector health insurance
Healthcare and Population Aging
• The Present An International Comparison – Mexico’s Healthcare Attainment
• The Future Aging Population and Other Key Healthcare Cost Drivers
• Policy Options for Mexico Is a Mixed Public – Private Healthcare Financing System in Mexico’s Future?
Life Expectancy is Expanding
Historical Life Expectancy (U.S.A.)
010203040
50607080
1900-02 1950 1960 1970 1980 1991
At Birth
At 65
At 75At 85
Expanding life expectancy is a worldwide phenomenon
Creating Larger Elderly Populations
65+ Population Growth, 2000 - 2050
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
200.0%
Luxembo
urgJa
panDen
markSwed
en Italy
Belgium
German
yFinlan
d
United K
ingdomGree
ceSpainFran
ceAustr
iaPortu
galNeth
erlan
dsUnite
d States
Canad
aAustr
alia
Irelan
d
Mexico’s 65+ is projected to explode over this period from 5.2 million in 2000 to 35.0 million in 2050
Healthcare Costs Increase with Age
Source: EU Economic Policy Committee 2001
Children Working Age Adults Elderly
Causing Potential For Large Increases in Projected Spending
Source: OEDC 2001 (Dang, et. al.)
Public Long Term Care Spending as % of GDP
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Belgium
DenmarkFran
ceIre
land
Italy
The Neth
erlan
dAustr
iaFinlan
dSwed
en U.K.
EU Ave
rage
U.S.Can
ada
Australi
aJa
pan
20002050
Public Medical Care Spending as % of GDP
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Belgium
Denmark
German
yGree
ceSpainFran
ceIre
land
Italy
The Neth
erlan
dAustr
iaPortu
galFinlan
dSwed
en U.K.
EU Ave
rage
U.S.Can
ada
Australi
aJa
pan
2000
2050
Projections based on demographic projections and current age-related healthcare costs
Range: 2% - 5%, EU average = 2.2%
Is a healthcare cost crisis unavoidable?
Is demography destiny?
Many Historical 65+ Population Increases Are Quite Large
Historical Population Increase Age 65+
0%
50%
100%
150%
200%
250%
300%
350%
Irelan
dAustr
ia
United K
ingdom
Czech
Repu
blicBelg
iumDen
markFran
ceSwed
enNorw
ayLuxe
mbourg
Switzer
land
United S
tatesNeth
erlan
dsNew
Zeala
ndSlova
kiaGerm
any
Iceland
Finland
SpainGree
ceAustr
alia
Poland
Canad
aTurke
yJa
panKorea
Mexico’s 65+ population grew 189% from 1960 to 2000
With No Strong Aging–Cost Relationship
Correlation r = .251, which is quite low
Aging Population vs. Health Care Spending, 1960 -1998
0%
50%
100%
150%
200%
250%
300%
350%
400%
0% 50% 100% 150% 200% 250% 300%
% Growth in Population 65+
% G
row
th in
Hea
lth C
are
Spen
ding
Further Historical Evidence
Cause of Growth inU.S. Medical Care Spending
1960 – 1993
Age/sex mix 7.2%Disposable income 17.6% Insurance coverage 5.3%Technology-inducing 69.9%
Source: Peden and Freeland, Health Affairs, Summer 1995
There is no evidence for aging as a significant driver of healthcare cost
increases …..
So, what’s going on here?
Healthcare Cost Projections
Cost is an interrelated function of:
!Life Expectancy
!Biological Morbidity
!Scope, Intensity and Cost of Services(Economic Morbidity)
Life Expectancy: Alternative Futures
Natural AgingLonger life expectancy with
rectangularization of survival curves" Fixed maximum life span at 115
" Life expectancy increasing to 85
" 95% of deaths between 77 and 93
Delayed DeathLonger life expectancy without limits" No fixed maximum life span
" No limit on improvements in life expectancy
Source: Fries, Milbank Quarterly, 1983
Biological Morbidity: Alternative Futures
Compression of morbidity 1
Elderly live longer and healthier lives– Healthy Lifestyle and early non-medical interventions postpone
onset of clinical morbidity– Onset of chronic conditions of aging are delayed more rapidly
than life expectancy increases
Expansion of morbidity 2
Elderly live longer, but sicker lives– Longer life expectancy and Unchanged Lifestyle does not
postpone onset of chronic conditions
1 Fries, James F., “Aging, Natural Death, and the Compression of Morbidity”, NEJM, July 17, 1980.2 Brody, Jacob A., “Prospects for an Aging Population”, Nature, June 6, 1985
Economic Morbidity: Alternative Futures
Compression of CareLess and/or lower cost medical care and frailty care
"Medical technology and De-institutionalized frailty care become Cost-Reducing
"Ethics of Social Solidarity and Death with Dignity allow healthcare systems to become Increasingly Constrained
Expansion of CareMore and/or higher cost medical care and frailty care
"Medical technology and Institutionalized frailty care remains Cost-Increasing
"Ethics of Individual Rights and Conquering Death force healthcare systems to become Increasingly Unconstrained
Changes in Life Expectancy, Biological Morbidity, and Economic Morbidity
Life
Exp
ecta
ncy
Onset of Disease
Onset of Care
Expanded Life Expectancy (Natural Aging or Delayed Death)
Expansion of
Morbidity
Equilibrium of Morbidity
Hea
lthy
Expansion of Care
Compression of Care
Compression of Morbidity
Unh
ealth
yToday
Equilibrium of Care
Equilibrium of Morbidity
Equilibrium of Morbidity
Life Expectancy
Economic Morbidity
Biological Morbidity
Future Healthcare Cost Scenarios
The Good …. Favorable Trends Develop"Life Expectancy – Natural Aging
• Compression of mortality near end of natural life"Biological Morbidity – Compression of
Morbidity• Elderly live additional years in good health
"Economic Morbidity – Compression of Care• Effective, inexpensive technology and favorable
healthcare ethics
Future cost Increases: lower than historical growth
Future Healthcare Cost Scenarios
The Bad …. Continuing Today’s Trends
"Life Expectancy – Natural Aging• Compression of mortality near end of natural life
"Biological Morbidity – Equilibrium of morbidity• Elderly live additional years, years with chronic
conditions increases about the same "Economic Morbidity – Equilibrium of Care
• Technology continues to expand scope of expensive diagnostic and palliative care.
• End of life debility and illness often treated with aggressive medical interventions,
Future cost Increases: continuation of historical growth
Future Healthcare Cost Scenarios
The Ugly …. Unfavorable Trends Accelerate"Life Expectancy – Delayed Death
• Continued mortality improvement without limit"Biological Morbidity - Expansion of morbidity
• Elderly live additional years often in poor health "Economic Morbidity – Expansion of Care
• Technology continues to rapidly expand the scope of expensive diagnostic and palliative care
• End of life debility and illness treated with increasingly aggressive medical interventions
Future cost Increases: higher than historical growth
Future Healthcare Cost Scenarios
Healthcare Spending 2050
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2000
$U
S (P
PP)
Current 2000 World-Class HALE 2050 Range
GOOD
BAD
UGLY
Current
Growth
Key Drivers: Technology, Lifestyle, Ethics
Historical Growth Continues
Implications
" There is a healthcare cost “crisis”" Demography is not destiny - aging populationis
a causative factor, but not the major one" Life Expectancy
• Elderly are living longer " Biological Morbidity
• Elderly may be living healthier, mainly due to healthier lifestyles
" Economic Morbidity:• Future cost increases will be determined mainly by
factors that are external to healthcare systems• Medical technology will the major causative factor in
growth of healthcare spending• Ethics play a very important secondary role
Healthcare and Population Aging
• The Present An International Comparison – Mexico’s Healthcare Attainment
• The Future Aging Population and Other Key Healthcare Cost Drivers
• Policy Options for Mexico Is a Mixed Public – Private Healthcare Financing System in Mexico’s Future?
Mexico’s Population is Aging
Mexico’s Work Force Is Growing
Mexico’s Health Care System Does Not Provide Universal Coverage
Income
Age
Poor
Near Poor
Moderate
Wealthy
Young Working Ages Retired
IMSS or ISSSTE (42.3%)
Uninsured (54.7%) or
SSA (.3%)
Private Insurance and IMSS (2.4%)
Evolutionary Option #1: EU Social Insurance System
Income
Age
Poor
Near Poor
Moderate
Wealthy
Young Working Ages Retired
Public Health Insurance
Public Health Insurance and Private Supplemental Insurance
Evolutionary Option #2: US Health Care System
Income
Age
Poor
Near Poor
Moderate
Wealthy
Young Working Ages Retired
Private Insurance
Private Insurance or Uninsured
Public Insurance (Medicaid) or Uninsured
Public Insurance (Medicare) and Private Supplemental Insurance
Medicare and Medicaid
Mexico’s Challenges
• Mexico is committed to universal coverage• Prospects are for rapidly growing health care costs
– Increasing wealth – Rapidly growing formal workforce– Rapidly growing elderly populations
• IMSS and SSA not likely to be able to accommodate growth• Private health insurance will NOT be able to satisfy need for
the elderly and poor --- public sector is only solution for these groups
• Public sector is NOT likely to satisfy needs of the growing workforce --- private sector is likely to be only real solution for this group
How might these formidable challenges be accommodated?
Mexico’s Options
UniformControllableAchievedSocial Insurance System (EU Systems)
More Narrow RangeModerate Control Achievable
Complete Mixed Public-Private System (Mexico)
Narrowed RangeSome ControlNear Universal
Access Possible
Incomplete Mixed Public-Private System (US System)
Wide RangeUncontrolled to ManagedNot Possible
Private Voluntary Markets
QualityCostUniversal AccessStructural Option
Health Care System Goals
Mexican’s Best Option for the Future?
Income
Age
Poor
Near Poor
Moderate
Wealthy
Young Working Ages Retired
IMSS, ISSSTE, SSA
Private Insurance and
Out-of-Pocket