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Will the aging population bankrupt our health care system?


Many politicians, doctors and the public believe that aging of the population is the main cause of increased health care costs.

If this is true, this paints an exceptionally worrying picture about the sustainability of health care in the future.

However, somewhat surprisingly, the majority of researchers don’t believe that aging plays a major role in increasing health care costs. What’s the story?

Tsunami or glacier?

You’ve heard the terms: gray tsunami and the demographic time bomb. Many are convinced that the growing population of elderly will bankrupt our health care system. However, evidence shows that population aging has little impact on rising health care costs.

Make no mistake, health care costs have risen dramatically in the past decade. Health spending in Canada rose from $75 billion dollars per year in 1996, to about $190 billion in 2010. Much of this increase in costs has been driven by more intensive treatment (especially during the last few years of life) and the growing unit costs of some aspects of health care such as drugs and technologies.

Researchers have argued that the gray tsunami is better described as a glacier. The population as a whole ages slowly. Today, about 14% of Canadians are 65 or older. In 2036, about one quarter of Canada’s population will senior citizens. In spite of the growing number of seniors, the share of health care money spent on seniors hasn’t changed significantly in the past 10 years.

A recent study found that time to death, rather than age, is the major driver of health care costs. What does this mean? That health care spending is much more closely related to the number of people who die each year than it is to the number of people who are senior citizens. With today’s elderly population healthier than ever, the number of deaths each year is not increasing very rapidly at all.

New approaches to caring for seniors

Studies have shown that the aging population will have a modest impact on health care costs.  Nevertheless, with health care costs nearing $200 billion per year in Canada, it is important to ensure that the elderly are being treated effectively and efficiently.

Stephen Duckett, a health economist at the University of Alberta argues that because the impact of the aging population will be felt gradually, “we have time to do something” before the demands of this growing population become a major threat to the sustainability of the health care system.

Many organizations and health care providers are developing new models of care to keep seniors out of hospitals and long-term care facilities, and in their own homes. If this is possible, this will be a win-win situation – most elderly people want to stay at home, and the evidence suggests that supporting people at home is a cost-effective substitute for hospital or long-term care. These models are in their infancy though, and much more work is needed to evaluate the models that do exist and replicate successes.

Ontario also requires a more effective end-of-life care strategy. Despite a desire to die at home, most people end up dying in hospital. Proper supports in the community may reduce the burden of death in hospital. There is wide variation within this province and within this country on the number of patients dying in hospital. In fact Canada ranks 9th on a Quality of Death Index among comparator nations.

Informed opinions: hear from a doctor and an economist

We asked a doctor who specializes in the care of the elderly and an economist who studies demographics and the health care system to share their opinions about whether the aging population will bankrupt the health care system, and what new approaches to caring for the elderly hold the most promise for controlling costs and improving quality of care.

Stephen Duckett, an economist who was previously CEO of Alberta Health Services, believes that the seniors will not bankrupt our health system because the impact of population aging on costs is small and is occurring gradually. Samir Sinha, the Chief of Geriatrics at Mt. Sinai Hospital and University Health Network, believes that the aging population could bankrupt the health care system if our health care system doesn’t change, and that our health care system is currently not designed to effectively and efficiently meet the needs of the seniors.

Will the ageing population bankrupt our health care system?

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This article has been closed to comments. 3 comments

  1. Professor D'Cruz

    Dr. Sinha makes a coherent set of arguments about the need to change the health system to deal more appropriately with the needs of the elderly. One additional factor that he did not address is the application of information technology in this area, particularly new developments in mobile computing and tablets. These could enable new modalities such as remote monitoring of health status, video dialogue between the persons receiving care and healthcare providers, particularly advance practice nurses, social services and even family members. Knowing that they are connected on a 7/24 basis can significantly improve the quality of life of the elderly and head off costly hospitalization by intervening early and effectively.

    I am particularly interested in the deployment of the IPad and similar devices as a major component of Aging At Home.

  2. Doctor M

    Hmmmm, the more things change, the more they stay the same. We argue against the need for change even though the imperative sits on the dining room table and glares at us.

    The big bulge in the boomers is about 12 to 15 years hence. They are a big bulge and that big bulge will all be dying and hence entering the period of maximum health care usage (that last magic 6 months) at around the same time. One also assumes that at the same time they have fallen well out of their maximum tax paying brackets (not withstanding that the early boomers are the wealthy ones, and the middle and late boomers are still debt ridden and not likely to have changed much) and have become at the same time the biggest consumers.

    So will it bankrupt the health care system As sure as the sun will rise tomorrow. We argue it won’t to our folly. It is true that health care costs have not been rising because of aging in the population, the proportion of the population reaching the maximum health cost bracket has been steady. Health care costs have risen mostly because of new technology and pharma. One assumes that those technologies and that pharma will be applied just as liberally to the aging boomers who know all about politic and lobbying, at the same rate that it is now. So a bigger proportion of the population with increasingly expensive treatments and tests applied to them – a recipe for disaster.

    Those who say that the boomers won’t bankrupt us are not cogently presenting options to reduce both unit cost of delivery and the supply of tests and procedures. Until they do, we are walking in the dark towards the cliff.

  3. Nanci Corrigan

    Along with technology and home care services, encouraging ALL adult Canadians to have an advance care plan (www.advancecareplanning.ca) would help to address many of these issues and help to ensure that patient voices are heard through the process.

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