We begin a new series of articles that will address the impact of the baby boomer cohort on the current health care system in the United States.
Up to 90 million people born between 1947 and 1964 are entering their later years in life. Currently comprising 12 % of the nation’s population, within the next 2 decades 20% of the population will be 65 and older. Even 20% of the present 302 million shows a significant increase in the number of elderly.
In approximately the last 10% of life seniors cope with less than optimal health. In the US in 2006 life expectancy was 75 years for men and 80 years for women. However, healthy life expectancy was only 67 and 71 respectively. (www.who.int/countries/en/)
Is the US health care system prepared for this demographic shift? Or, to be more specific are the various stakeholders and policy makers preparing for the increased demand for medical services by that many more elderly patients?
The discussion surrounding this question can be divided into 3 parts:
- How health care is financed? How are health care dollars spent and where do those dollars come from?
- How is health care delivered? What are the trends for delivery in the future?
- What is the present health care philosophy or paradigm? What if any changes are needed to provide care to more patients?
There is no doubt that these factors affect each other; readers will begin to see common themes emerge in the ensuing discussion.
It must be noted here that the US life expectancy and healthy life expectancy are the lowest of the G7 countries. Even allowing for the fact that the US population is slightly more than 2 times larger than the next nearest G7 country, the nation spends far more both GDP and per capita wise than any other country. This is despite the fact that the US is the only G7 country that lacks universal access to health care for its citizens.(www.oecd.org) At present up to 20% of US citizens are uninsured.(Consumer Reports Aug 2009) Research has proven that uninsured patients who enter the Medicare system in their later years prove to be more costly than previously insured patients. The baby boom bulge will force policy makers to consider the long term humanitarian and cost consequences of a lack of universal access.
Here are some cost facts that give pause for thought:
More than one out of every three dollars of health care costs is spent not on providing health care but on administration, a greater percentage than any G7 country and twice as much as Canada.(Why Your Health Matters A. Weil 2009)
From 1950 to the present health care costs have increased almost 300 times to 2.2 trillion dollars in 2007. In comparison consumer goods and services increased 8 times in the same period. (Why Your Health Matter A. Weil 2009) Is the pace of the increases of these costs sustainable in the decades to come for providers and patients?
The US spends the most of any country on medical research, which in past decades was government funded. Today 80% of research is funded by drug companies. Has that focus on research translated to better health care for citizens? For example, the American College of Cardiology states that most heart disease is being delayed not prevented. (Why Your Health Matters A. Weil 2009)
Most patients don’t realize that health insurance has been around for less than half a century. Previously, health care costs were reasonable enough to be paid out of pocket by patients. Today premiums and deductibles have both patients and employers looking to lower costs. For example, in California recently Anthem Blue Cross raised their premiums 39%. (http//articles.latimes.com/2010/feb/09) In 2008 average premiums for an employer health plan for a family was $12,500.(Why Your Health Matters A. Weil 2009)Only once in little more than twenty years have health insurance premiums increased less than either inflation or wages. For most of that period they increased by at least a factor of 2.(www.allhealth.org/briefingmaterials/KFF-CostTrends However, being covered by a plan may not prevent financial duress. Up to 68% of patients filing for bankruptcy had health coverage but enough medical debt to bankrupt them. This bankruptcy occurs every 30 seconds in the nation. (Why Your Health matters A. Weil 2009)
Due to these rising costs employer corporations are looking to save money. One way they are achieving their goal is to end coverage for near retirees, those age 55-64, and retirees themselves. This could leave many people in this age group without coverage or attempting to buy individual health care insurance. Private insurance companies are reluctant to sell policies to this age group and discourage them from doing so buy charging higher premiums and deductibles for policies with limited benefits and more exclusions. It is worthwhile to note that in the near retiree age group 68% are still in the work force. The fact cannot be ignored that this may be due to a need for an employer sponsored health plan or simply the need to pay for out of pocket medical expenses. (www.hschange.com/CONTENT/1083/)
Globally American companies decrease their competitive advantage because health care coverage is factored into wages. For example in the auto industry Ford and GM’s costs for health care are $1500 per car compared to $450 and $150 for BMW(Germany) and Honda(Japan). What would an American auto worker say if he or she knew they could earn a higher wage if health care costs could be brought into line? What would a coffee drinker say if he or she knew that their fancy latte would cost less if the company didn’t have to pay high premiums on their group coverage?(Why Your Health Matters A. Weil 2009)
If employers were able to provide affordable health care coverage sick employees would not put off needed health care until it became unavoidable urgent care, which has a higher ultimate cost to the nation.
Remember these higher costs do not mean the US is a healthier nation with better health care outcomes that other developed countries.
Another big factor in health care costs is for profit hospitals which accounted for 50% of health care costs in 2006. (Why Your Health Matters A. Weil, 2009) It must be noted here that it is easier for medical providers to pass on costs to patients because unlike other goods or services patients will pay whatever the provider charges. If the leather couch is too expensive a shopper may decide to buy a cloth one or wait until their old couch springs a leak. Not so if a person is sick. Despite the higher fees for care in a for profit hospital Studies have shown their care is not better than a non profit hospital.
Medical technology has advanced significantly in the past few decades. The Congressional Budget Office states that 50% of the recent increase in health care costs are due to new technology and pharmaceuticals. The companies that own these technologies and pharmaceuticals actively promote their products directly to potential patients. For 2 examples the US and New Zealand are the only 2 developed countries to allow TV advertising for drugs. This advertising is effective because Americans account for half of the world’s dollar total spent on pills. Research has also shown that health care providers that own expensive technology are more likely to prescribe them more than those who don’t. Yet a study done in the 1990s has shown that technology only saved or extended one out of 16,000 lives. (Why Your Health Matters A. Weil 2009)
It must be noted here that in other sectors of the economy advances in technology usually bring costs down. Take long distance phone calls for example. In 1960 the cost of an overseas three minute call was $60.42 in 1980 it was $6.32, in 1990 it was $.40. However, medical providers bill on a number of services model not a quality of outcome model, because that is how the insurers reimburse.
Patients spend an average of $8000 per year on health care today. If the current situation is projected into the next decade that figure will double. However, wage increases will not come close to the amount seniors and a family will need for health care. Will families and the elderly be able to bear that cost?
If changes are not made the cost of health care to the nation is expected to double to over 4 trillion dollars in 2015, or about 33 percent of GDP. Can the US economy bear the burden of that cost increase? (Why Your Health Matters A. Weil, 2009)
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