AGEING OF POPULATION AND HEALTH CARE EXPENDITURE J

Report
AGEING POPULATION AND
THE FUTURE
OF HEALTH CARE PLANS
An international perspective
J. François Outreville
UNCTAD
Visiting Professor SUFE
Adjunct Professor HEC Montréal
AGEING POPULATION AND THE
FUTURE OF HEALTH CARE PLANS
• Background information on health care
systems
• The increasing role of private health plans
• Challenges to come
• Ageing revisited
0
Mexico
Poland
Finland
Czech
Turkey
Spain
UK
Korea
Austria
Hungary
Japan
Italy
Denmark
Netherlands
Australia
Sweden
Portugal
Canada
Belgium
Norway
France
Greece
Germany
Swizerland
USA
Health care expenditure as % of GDP
Source: OCDE Health Data 2005
A comparison between 1980 and 2003
16
14
12
10
8
6
4
2
The Growth of HCE today:
examples
• Rapid Growth
USA, Greece, Portugal,
Korea, Turkey
• Stabilized
Netherlands, UK, Austria
Germany, Canada
• No growth
Sweden, Finland, Denmark
A linear relationship?
Health care expenditure:
the size of public sectors
Source: OCDE Health Data 2006
Out of Pocket expenditure and Private
Health insurance: No relationship
Source: OCDE Health Data 2004
Health Insurance systems:
principles
•
•
•
•
Bismarck’s principle
Beveridge’s principle
State budget
Private insurers under state control
Health Insurance systems:
Examples
Compulsory
Private
or
competitive
Public
or
monopolistic
Netherlands
Switzerland
Free choice
USA
« Opt-out » (Germany)
Almost all european UN system and International
Organizations
countries
(Bismarck or Beveridge)
0
Hongrie
Japon
Italie
Portugal
Danemark
Finlande
Mexique
UK
Espagne
Autriche
Australie
Irlande
Suisse
Canada
Allemagne
France
Pays Bas
Increasing role of Private Insurance
HCE as % GDP
Source: OCDE Health Data 2004
16
14
12
10
8
6
4
2
0
Finlande
UK
Espagne
Portugal
Italie
Allemagne
Danemark
Autriche
Suisse
Irlande
Canada
USA
France
Pays Bas
Australie
Population covered by Private Insurance
Source: OCDE Health Data 2004
100
90
80
70
60
50
40
30
20
10
Classification of Private Health
Insurance Plans
• Primary coverage
• Risks not covered by the public scheme
(supplementary insurance)
• Complementary insurance
• Access to private market (substitutable)
Private Health Insurance
Examples
Substitutable
Optional
Compulsory
UK
Germany
Italy
Australia
Spain
Netherlands
Complementary
France
Belgium
Supplementary
Switzerland
Canada
Netherlands
The challenges
• Health insurance schemes are being dragged into increasing
expenditure by demographic changes and improvements in
medical treatment.
• A growing interest in the problem of the long-term survival of
public schemes is paralleled by a desire to arrive at an
acceptable compromise between equity and efficiency,
between meeting individual needs and controlling collective
expenditure.
• The European social philosophy of each contributing
according to his means is radically opposed to the
individualistic North American arrangement whereby everyone
takes out insurance according to his needs.
The problems
•
•
•
•
•
Budget deficits
Tax limits
Cost of new medical treatments
Ageing of the population
Decreasing labor force
Several options are available
• « Opt out » (Germany)
– Voluntary or compulsory
• Public scheme covers only catastrophic risks
– Case of LTC (Netherlands and Germany)
• Higher and competitive premiums but subsidies for lower
income
– Case in Switzerland
• Covers only basic health treatments (Doctors & Hospitals)
– Some treatments excluded (drugs in Canada)
• Open markets to free choice and free trade
– Cultural barriers
– Portability of insurance coverage
0
Greece
Portugal
Italy
USA
Canada
Spain
Germany
UK
Sweden
Netherlands
Finland
Denmark
Belgium
France
Austria
Satisfaction rate for public schemes is high
Source: OCDE Health Data 2004
90
80
70
60
50
40
30
20
10
AGEING POPULATION AND THE
FUTURE OF HEALTH CARE PLANS
• “The first and primary cause of this crisis is once again
the ageing of the population…” (Longman, 1987)
Ageing of the population
When Bismarck devised the social security contract
for Germany, the official pension age was 65 and life
expectancy 45.
Keeping the same ratio, retirement age today should
be at 98.
Old age estimated to be at 75 years in 1985, will be
82 years by 2040: an annual gain of 1.5 months
Ageing of population
and health care expenditure
Ageing of population
and health care expenditure
Source : S. Jacobzone (2003)
Ageing and HCE: What is the
relationship?
Hypotheses:
• The probability of initiating a treatment episode is
independent of age.
• Medical expenditure per treatment episode increases
with age.
• Medical expenditure increases sharply with closeness to
death regardless of age.
• Medical expenditure before death increases/decreases
with age?
References:
•
•
•
•
•
•
•
Lubitz and Riley, New England J. of Medicine, 1993
Zweifel, Felder and Meier, Health Economics, 1999
Felder and Schmitt, J. Health Economics, 2000
Hogan, Lunney, Gabel and Lynn, Health Affairs, 2001
Levinsky et al., J. of American Medical Association, 2001
Outreville, Geneva Papers on Risk and Insurance, 2001
Seshamani and Gray, Applied Health Economics and Health
Policy, 2003
• Seshamani and Gray, J. of Health Economics, 2004
• Outreville, Applied Health Economics and Health Policy, 2005
Empirical evidence
• UN health insurance plan
• 15,000 insured persons
• 2 periods 1996-1997 and 2000-2002
HEALTH CARE EXPENDITURE
(HCE)
12,000
10,000
8,000
Nb Insured
HCE 2000-02
6,000
4,000
2,000
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
HCE in the two samples
12,000
10,000
8,000
HCE 1996-97
HCE 2000-02
6,000
4,000
2,000
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
Hospital HCE in the 12 months
preceding death
By class of age in CHF
50,000
45,000
40,000
35,000
30,000
25,000
Average cost
20,000
cost before death
15,000
10,000
5,000
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
HCE last four quarters of life
70
60
HCE (%)
50
40
Swiss sample
US Medicare
30
20
10
0
4
3
2
Quarters to death
1
HCE before death
From one month to one year
100
90
80
70
1 month
3 months
6 months
12 months
60
50
40
30
20
10
0
0-29
30-39
40-49
50-59
60-69
70-79
80-89
90-99
HCE for survivors
12,000
10,000
8,000
HCE total
HCE Survivors
6,000
4,000
2,000
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
Ageing and HCE: What is
increasing with age?
• Trends in medical expenditure are influenced
by trends in disability and product innovation.
• Product innovation focus on increasing quality
of life at higher ages.
• LTC expenditure before death increases with
age
Alzheimer’s disease
Percentage of cases by age group
100
90
80
70
60
Rate
50
40
30
20
10
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
Cost of pharmaceuticals by age
On average from 13% to 16% of total HCE within 10 years
1,400
1,200
1,000
800
600
400
200
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
Nursing and Long-Term Care (LTC)
Average number of days in an hospital has been reduced
from 10 to 7 days within 10 years
3,000
2,500
2,000
Average Expenditure
Nb of Cases
1,500
1,000
500
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
AGEING AND THE FUTURE OF
HEALTH CARE PLANS
• SUSTAINABILITY
– Individuals are living longer in good health.
– People over 95 are on average in better state of health than
those over 85 (absence of chronic diseases).
Mortality and disability scenarios
T= Total expected life
H= Healthy expected life
Source: E. Pitacco (2002)
The demand for LTC
Hypotheses
Stable population Ageing population
Compression
Demand decrease
Demand stable
Equilibrium
Demand stable
Demand increase
Pandemic
Demand increase
Demand increase
Negative factors
• Medical expenditure per treatment episode
increases with age.
• Trends in medical expenditure are influenced by
trends in disability and product innovation.
• Product innovation focus on increasing quality of
life at higher ages.
• The traditional family structure continue to change
Improving trends
• Declines in disability rates (-1% per year) even
at older age (85+).
• Instrumental activities of daily living (IADLs)
are easier to perform today than 20 years ago.
• Product innovation may change the trends
End of life HCE
60,000
?
50,000
40,000
HCE 2000-02
30,000
HCE 1996-97
20,000
10,000
0
30-39
40-49
50-59
60-69
70-79
80-89
90-99
100-109
Nursing and Long-Term Care
LTC 2002
LTC ?
30-39
40-49
50-59
60-69
70-79
80-89
90-99
100-109
AGEING AND THE FUTURE OF
HEALTH CARE PLANS
• SUSTAINABILITY
– Individuals are living longer in good health
• EQUITY
– Health Care
– Health Care
– Health Care
or Good Health
or Long Term Care
or Terminal Care
• INNOVATION
– Health Insurance
– Traditional Insurance
or
or
Life Insurance (terminal illness)
Alternative Risk Transfer
AGEING POPULATION AND THE
FUTURE OF HEALTH CARE PLANS
• “As people are living longer, the hope is that they will
also live healthily.”

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