Aging and Sustainability
The idea that population aging will jeopardize the financial sustainability of Medicare seems to make sense because per capita healthcare costs increase with age. In 2008, provincial and territorial governments spent an average of $10,742 per Canadian age 65 and older, compared to $2,097 on those younger than 65. Within the senior population, spending increases with age, with healthcare expenditure on seniors age 80 and older costing an average of $18,160 per person, more than three times higher than for seniors below age 70 ($5,828 per person on average; CIHI, 2010). Older people are also more likely to have higher rates of chronic illness (that are costly to treat and manage) than their younger counterparts. Research has demonstrated that people with more chronic illness spend longer in hospital and have more physician consultations (Denton & Spencer, 2010).
However, multiple studies by Canadians on this issue (e.g., Mackenzie & Rachlis, 2010; Hogan & Hogan 2002) suggests that the rate of increase in costs caused by aging during the next 20 to 30 years should be much less than the rate of aging, less than half of that rate. They estimate that aging will cause an average annual increase in inflation-adjusted provincial government health costs of 1.0% between 2010 and 2036 while the annual rate of aging which they projected was 2.1%.
How do they estimate the projected cost increases due to aging accurately? It is often not recognized, that this aging of the population is not something new; the Canadian population has been aging for the past 40 years and so we have good evidence on how much the aging of the population per se affects health care costs and we can use this evidence to make estimates of how health care costs will be affected by aging in the future. Consider the analysis of aging prepared for the Romanow Commission (Hogan & Hogan, 2002). The analysis found that between 1980 and 1997 aging increased inflation-adjusted per capita health costs at an average annual rate of 0.5%, which is much less than the average annual rate of population aging during that period, 1.5%.
References
October 28, 2010 — Canadian Insistute for Health Information. Health care spending to reach $192 billion this year: Growth slows to lowest rate since 1997; share of spending on seniors stable — Accessed January 22, 2010.
October 2009 — Denton FT, Spencer BG. Chronic health conditions: Changing prevalence in an aging population and some implications for the delivery of health care services. Can J Aging 2010;29:11-21.
Nov. 25, 2002 — Hogan S, Hogan S. How will the Ageing of the Population Affect Healthcare Needs and Costs In the Foreseeable Future? Discussion Paper Commissioned for the Romanow Commission on the Future of Health Care in Canada.
August 2010 — Mackenzie H, Rachlis MM. The Sustainability of Medicare. Canadian Federation of Nurses Unions. — Accessed February 27, 2010.
