Dean Sherzai MD, MAS, PhD(c) Director of research Neurology Director of Memory and Aging Center

Aging Population: Implications of Health care Finance

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Aging Challenges

Non communicable diseases are becoming a growing burden. Chronic noncommunicable diseases are now the major cause of death among older people in both more developed and less developed countries.

Some populations will shrink in the next few decades. While world populationis aging at an unprecedented rate, the total population in some countries is simultaneously declining.

Agism --- less likely to receive appropriate help

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Aging

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Aging

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Aging Challenges

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France

SwitzerlandRussia

GermanyItaly

Finland

NorwaySwedenBelgium

United Kingdom

Denmark

SpainPortugal

Greece

Japan

Ireland

Czechoslovakia

New Zealand

Australia

Canada

United States

Poland

ArgentinaHong Kong

Taiwan

Mexico

Korea

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Aged Dependency Ratio (>65/Aged 15-64)

Health Expenditures and Ageing

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Aging Challenges

• Those over 65 visit their doctors, on the average, 7 times per year compared to 4 x for those < 65

• in U.S. >65 make up 13% of population but require >35% of the healthcare cost

• In most western countries expenditure stays stable until 55. After this point it escalates rapidly unit 80 when it has tripled

• last 2 years of life highest cost whether 8 or 88

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Aging Challenges

Familystructuresarechanging.Aspeople live longer and have fewer children, family structures are transformed, leaving older people with fewer options for care.

Patterns of work and retirement are shifting. Shrinking ratios of workers to pensioners and people spending a larger portion of their lives in retirement increasingly strain existing health and pension systems.

Social insurance systems are evolving as social insurance expenditures escalate, an increasing number of countries are evaluating the sustainability of these systems.

New economic challenges are emerging. Population aging will have dramatic effects on social entitlement programs, labor supply, trade, and savings around the globe and may demand new fiscal approaches to accommodate a changing world.

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Aging Challenges

• 86% of those over age 65 suffer from at least one chronic disease of aging

• >53% from 2 or more • This is even more prevalent with regards

to degenerative disease• after 5% of those over the age of 65 suffer

from dementia and this doubles every 10 years until it reaches 45% in those greater than 85

• Suicide rates are among the highest among those

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Aging Challenges

• few geriatricians -- in U.S. 1/2 of the Geriatricians that it needs. The number has actually declined and by 2030 will probably have 1/4 of the 36,000 it needs

• leads to far reaching and costly outcomes• little research

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Aging Challenges

• With age come difficulty living at home; either due to frailty and conditions such as dementia

• longterm care usually by unpaid family members

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No Place like home

• More countries addressing this issue are understandably focusing on ways to improve the provision of home care, rather than invest in more institutional care.

• In Illinoois ex.- department of aging spends about $117 per day for people in nursing homes, against a monthly cost of just $650 for home care

• Much more in line with wishes of the care receiver and family members

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Aging Challenges

• But more comprehensive strategy is needed

• a system of home care training is needed

• eg.- of On Lok -- where it bridges the care provided medical services and the non-medical ones- such as mobility, and social workers, etc.

• Program of All-inclusive Care for Elderly (PACE)- gaining momentum

• Re-admission rates of elderly in On Lok and PACE programs are 1/2 of those not in similar programs

• currently 1.8 -2.3 million americans live in nursing homes, but integrated community based care is a better alternative for most

• this is also where technology comes in 15

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Aging Challenges

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Aging Challenges

• Some governments have begun to plan for long term, but most have not

• The window of opportunity for reform is closing fast

• by 2050 we will have nearly have 2 workers per older person

• While some countries have planned for different schemes of social insurance for older people to double U.S. has not

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Aging Challenges

• States must recognize the challenges ahead or it will become insurmountable

• Challenges in individual and societal levels

• On individual level people need to focus on preventive measures and financial preparedness

• there is need for reforms to be able to adjust to the looming costs or will shift an enormous economic burden to the next generation

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Aging Challenges

• Since the beginning of recorded human history, young children have outnumbered older people. Very soon this will change. For the first time in history, people age 65 and over will outnumber children under age 5. This trend is emerging around the globe. Today almost 500 million people are age 65 and over, accounting for 8 %of the world’s population

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Aging Challenges

By 2030 the world is likely to have 1 billion older people, accounting for 13 percent of the total population. While today’s proportions of older people typically are highest in more developed countries, the most rapid increases in older populations are occurring in the less developed world. Between 2006 and 2030, the number of older people in less developed countries is projected to increase by 140 percent as compared to an increase of 51 percent in more developed countries.

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Aging Challenges

• In United States and the Western world the number of the oldest old (>85) is growing disproportionately.

• It is projected that by the year 2040 we will have over a million centennerians in U.S. Alone.

• The oldest old consume a significant ratio of the health care cost

• Globally the oldest old is projected to grow by 151% by 2030

• With certain discoveries the number of oldest old is expected to expand higher than anticipated

• With the aging of population there has been and will continue to be a shift in disease patterns -- one from communicable diseases to one of chronic diseases of aging (CVD, Cancer, CVA, Pulm. DZ., diabetes, Dementia, etc.)

• The goal is to have compression of the period of debilitating disease and suffering at the end of life

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Aging Challenges

• Many of the world’s old age social insurance programs had been based on a pardigm of more than 30 years in the work force and < 15 years in retirement. These numbers have changed significantly with the aging of society, and many countries have already taken steps toward reforming their old age social insurance programs.

• increases in pension age have been a common pattern

• Other countries have taken to increasing the tax rate in order to compensate

• Yet others have reduced the health care cost through various osterity measures

• But in U.S. non- of those is likely to make a dent unless there is a different approach to aging-- one that involves the resources already in place and prevention and support at the heart of the care

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Aging Challenges

• Besides the traditional discussion of how to adapt to the aging challenges of increasing taxes, or lowering health care cost, or raising the age of retirement

• We need to take a completely novel new approach which is a transition back to older community based approach to aging

• examples China, Singapore and some other countries.

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Aging Challenges

• Thus, it's essential to build a health system that provides older adults with high-quality care at the right place and time, depending on their needs. The spectrum of care settings could include independent care, home care, day care, assisted living, skilled nursing facilities, hospitals, or hospices. New information technologies, such as electronic health records and telemedicine, can help to compensate for a shrinking health care workforce relative to the patient population. Such tools also can help patients communicate with their providers and manage their own conditions

• In 1998 and 1999, Medicare implemented prospective payment systems for home health care and skilled nursing services. Although these new systems apply only to Medicare-covered post-acute care, they dramatically changed the landscape of long-term care financing by restricting and redistributing the flow of payments to and among providers. Since then, the financing system has been in turmoil, with federal and state legislative and regulating bodies hunting for solutions to a system that is fundamentally flawed.

In focus group studies, elderly adults say that they consider health care an entitlement. And yet, although Medicare and Medicaid already fund care at levels that federal and state governments cannot afford, the quality of care and quality of life provided by these programs are not up to the level that Baby Boomers will most certainly demand—or the programs could provide if they were funded appropriately.

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Aging Challenges

• We should begin by reforming our incident-based system of care. Health care today is reactive: if we get sick, we make an appointment to see a physician; if we become seriously ill or injured, we go to an emergency department or clinic.

• Patients need to take on greater responsibility for their own care. Under a "patient-driven" system, providers would support patients in their preventive and health maintenance efforts through a dynamic system of wellness care. As an example, consider the national epidemic of obesity, which often leads to diabetes, a disease that can have serious and costly long-term side effects. As diabetes progresses and the body fights this debilitating disease, more care becomes necessary, including hospitalization and pharmaceuticals. If more Americans were able to maintain healthy diets and exercise, the health care system would be more efficient and cost less.

• Such a system would depend on interoperable health information technologies and personal health records. Today's technology would allow individuals to track their health status; when a trend is in the wrong direction, they could work with their providers to take action. Most people watch their bank accounts to ensure that they do not overdraw their funds. Why can't they do the same for their health? This would require the health care system to provide input and share information between health care settings—an objective of the national program to establish electronic health records

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Distribution of Average Spending Per Person, 2004

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Distribution of National Health Expenditures, by Type of Service

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Why is cost growing

• Chronic diseases of aging• Wealthier countries can spend more on

technology• Insurance coverage has increased• Americans pay a lower share of health

expenses than they used to

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What can be done to Address rising costs?

• The amount U.S. Pays per person is the highest in the world

• Promoting evidence based medicine--shift in geriatric education

• pay for performance• better surveillance of disease• live information• support• Developing ways to explicitly assess and weigh the costs and benefits of new

technologies is one promising approach, although such interventions present serious practical and philosophical challenges. Practically, the sheer volume and pace of medical advance would make it difficult to actually assess many important changes before they were incorporated into medical practice.

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Solutions

• Use technology to deliver key skills remotely and enable home-based care

• At a basic level, it can be applied to support medical professionals by relieving them of routine, mundane tasks.

• More broadly, the wider adoption of telemedicine and remote monitoring systems will likely assist in making home-based care more feasible and safe. This enables medical professionals to provide advice remotely, and by monitoring patients’ vital signs it gives nurses time to focus on more important tasks.

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Comparative Health Expenditure in United States and Selected Countries

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Germany

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Japan

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Singapore

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Comparative Health Expenditureand Aging - WHO Report 2000

$/capita (Int $) Public/Total %GNP %Pop>60 DALEUnited States 4187 (3724) 44.1 13.7 16.4 70.0United Kingdom 1303 (1193) 96.9 5.8 20.9 71.7Australia 1730 (1601) 72.0 7.8 16.1 73.2New Zealand 1416 (1393) 71.7 8.2 15.5 69.2Japan 2373 (1759) 80.2 7.1 22.6 74.5Korea 700 (862) 37.8 6.7 10.2 65.0China 20 (74) 24.9 2.7 10.0 62.3India 23 (84) 13.0 5.2 7.5 53.2Singapore 843 (750) 35.8 3.1 10.3 69.3Brunei - (857) 40.6 5.4 5.0 64.4Malaysia 110 (202) 57.6 2.4 6.5 61.4Thailand 133 (327) 33.0 5.7 8.5 60.2Philippines 40 (100) 48.5 3.4 5.6 58.9Indonesia 18 (56) 36.8 1.7 7.3 59.7Vietnam 17 (65) 20.0 4.8 7.5

58.2Myanmar 100 (78) 12.6 2.6 7.4 51.6Cambodia 21 (73) 9.4 7.2 4.8 45.7Laos 13 (53) 62.7 3.6 5.2 46.1

Public-Private Health Expenditure in Singapore (1965-2000)

Singapore Health Statistics – Past and Present

1980 2005• Life expectancy 70 years 80 years• Infant mortality 12/’000 2.5/’000 • Aged/total population 5 % 9 %• Public hospital mix 85 % 80 %• Health expenditure/GDP 3 % 4 % • Health expenditure/ 6 % 7 %

government budget• User fees recovered / 3 % 60%

public expenditure

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Health Expenditures and Ageing

Past Financing System for Long Term Care

Community care / long term care• Direct payment by individuals and families• Community assistance Voluntary Welfare Organizations’ fund-raising (Up to 50% or more of recurrent expenditure) • Government funding Grants-in-aid or subventions - Capital funding (up to 90%) - Recurrent funding (up to 50% of cost norms; 75% for public assistance cases)

Future Community Long Term Care Model in Singapore

• Involvement of voluntary welfare organizations• Co-financing from government of 3:1 ratio,

based on piece-rate and program funding • Within grassroots structure of local government

- Community Development Councils (CDC)• Multi-service centers to be co-located with

existing Community Clubs and Centers (CC)• Networks of neighborhood Residents Activity

Centers (RAC) & Seniors Activity Centers (SAC)

Similar Approaches to Old Age Security and Health Care Financing

World Bank’s 3 Pillars for Old Age Security• Redistribution • Savings• Insurance

Singapore’s 3M for Health Care Financing• Savings (avoids inter-generational transfers)• Insurance (pools risks for catastrophic care)• Taxation (subsidizes the poor and indigent)

Policy Implications –Towards Cost-effective Care

• Avoid hospitalization and institutions• Provide substitutes and alternatives

eg. day care, home nursing, hospice, etc

• Develop community-based services• Strengthen family support and home

care• Improve housing and living

arrangements