The Medicare Myth that Refuses to Die

By John Lorinc, Globe and Mail

Canada

August 9, 2008

Like a "zombie" that keeps coming back, the myth of how aging boomers will send health costs through the roof is something that refuses to die.

Though he makes the remark jokingly, Robert Evans, a health economist at the University of British Columbia, has spent years trying to debunk this common misperception about the future of health spending.

The prediction of a demographically based crisis is repeated routinely in the media and public-policy debates by politicians, pundits and economists such as Pierre Fortin, who observed in a recent essay on Canada in 2020 that boomer health-care costs will administer a "demographic shock," resulting in a 14-per-cent spending hike above and beyond current growth rates.

In anticipation of such a shock, some governments are already taking action: Throughout this summer, British Columbia Health Minister George Abbott has been flying around the province, teasing out the details of a long-term primary-care plan specifically designed to prevent the boomers from overloading B.C.'s $15-billion health system.

But experts such as Prof. Evans urge policy-makers to focus their efforts elsewhere. "Very little of the increase in health-care costs will be due to the fact that there will be more old people around."

He says numerous studies have determined that only about 20 to 30 per cent of the projected increases in health-care spending will be attributable to the aging of the population; the rest of the inflationary pressure is to due to other factors, such as rising drug costs and salaries for health-care providers.

"The demographic story gets told over and over again because it's simple," he says.

LIVING LONGER

One reason boomers won't bankrupt medicare is that, for starters, they are living longer, healthier lives. Lifespans have been rising steadily for decades because of improvements in education, living standards, medical technology and working conditions. Seniors are healthier today than a generation ago, and thus less of a burden on the health system. This extension of good health into old age is connected to the decline of smoking and improvements in the treatment of once fatal or debilitating conditions including cardiac problems, cancer and chronic diseases.

And when boomers do die, they are likely to spend less time doing so.

Scientists have noticed that among seniors, the time between decline and death is decreasing on average - a factor that would significantly limit the health costs of a very large generation.

According to health economists such as Prof. Evans, the cost of falling ill and then dying is expensive whether you are 37 or 87 - mainly because of expensive medical attention that tends to be incurred in the final year of life, such as extended hospital stays, tests and surgical procedures.

According to a 2007 report by the Canadian Centre for Policy Alternatives, average health costs in the final year of life are about $29,000 for men and $51,000 for women, regardless of age.

The average healthy retiree, meanwhile, consumes only about $600 a year in health care.

"If I'm relatively healthy," notes Raisa Deber, a University of Toronto health-policy expert, "the fact that I've lived longer isn't a big problem."

The second factor has to do with what is called "compression of morbidity," currently a hot topic among those who research aging, according to Ken Langa, an associate professor at the University of Michigan who is involved with a long-term national study tracking the health of 20,000 American seniors.

"The amount of time older people will spend in ill health or disabled will decrease over time," says Dr. Langa, who is also a general internist. By way of example, he cites the conclusions of recently published peer-reviewed survey of the prevalence of Alzheimer's disease and other dementias in Americans over 70.

Comparing about 7,400 seniors in 1993 with 7,100 in 2002, the study found that the rate of cognitive impairment had fallen, remarkably, from 12.2 per cent to 8.7 per cent in less than a decade. What's more, those with dementias in the 2002 cohort tended to experience a "more rapid decline to death," Dr. Langa's research team concluded.

'YOUNGER' OLD PEOPLE

There's a third factor that also seems to be mitigating health-budget pressures and it has to do with the health-care differences between "younger" old people (in their 60s and 70s) and the elderly (80s and up).

A U of T study published in 2007 noted that critically ill patients in their 60s or 70s rely more heavily on the publicly funded system (acute-care hospitals, surgical procedures, etc.), whereas very elderly dying people tend to be in nursing homes, which are less expensive than hospitals, or outside the publicly funded system all together.

This trend comes with a caveat, however. Prof. Langa warns that the obesity epidemic is threatening to reverse a century of mortality and health gains in North America with unprecedented levels of diabetes and other weight-related chronic conditions.

COSTS WILL RISE

No one is disputing that health-care costs will continue to rise. A projection done in 2002 for the Royal Commission on the Future of Health Care estimated that from 1998 to 2030, annual growth in real health-care expenditure per capita would be about 2.9 per cent. But only 0.9 per cent - a third - will be due to all those extra seniors. The rest of the increase will be the result of subtle but important changes in the way medicine is practised in the 21st century.

Prof. Evans points out that while hospital stays are getting shorter, the use of medical and physicians' services has increased, meaning that health care has become more intensively administered for every age group, including seniors. "We're doing more for elderly people than we did before," he says. More procedures and high-tech tests are being conducted. Costly new drugs are being prescribed. And aggressive, life-prolonging technologies are being applied as a matter of course.

Another factor that will drive up health-care costs in certain parts of the country is the regional variation in care.

Studies by Ontario's Institute for Clinical Evaluative Studies have found major differences in hospital admission rates and lengths of hospital stays for cardiac patients across the country - up to 40 per cent higher in the Maritimes and Quebec than in B.C. and Ontario, for example.

In short, certain provinces will pay more to treat the same illness, even though extra spending may not result in fewer deaths or a healthier population. As Prof. Evans says, "That's one of the things that gets covered up when you say the whole issue is one of demographics."

IDEOLOGICAL HUE

In some cases, the prediction of a coming health-care crisis based on the unarguable fact of numerous aging boomers can be traced to ideological influences.

Prof. Deber argues that the presumed stresses boomers will inflict on the system are a kind of red herring, trotted out by groups that favour injecting more private care and private capital into the system.

Indeed, the Fraser Institute, the conservative think tank in Vancouver, has routinely questioned the "sustainability" of a public-health system serving an aging population.

But Prof. Deber says politicians shouldn't be bullied into drastic health reforms based on a misconception. "The sky isn't falling," she says.

What is needed instead, she says, is for policy-makers to focus on more measures to prevent sickness and to assist individuals with long-term chronic conditions.

Prof. Evans, meanwhile, thinks that it may still take some time to dispel the zombie-like myth of an aging population crushing the health system.

"People like me have been battering away at this for years," he says with a sardonic chuckle, "but I don't think it gets through."

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