An aging population = higher healthcare costs, right? Nope.

 As the Affordable Care Act rolls out and some healthcare costs spike, conservatives have a scapegoat and an unrelenting message: old people are responsible for rising costs and will not pay their share. It’s an all-too-familiar alarmist forecast: a “gray tsunami” of greedy, needy olders will drain the public coffers and consign the next generations to indentured servitude.

 At heart is that pesky philosophical divide: why should communitarian good trump individual liberties?  It’s what underlies the brouhaha over the individual mandate (which requires most Americans to enroll or pay a tax): why should the young and healthy be forced to pay for coverage if they don’t want to? The fact is that Americans of all ages pay the price of a broken healthcare system. It’s not broken because more people got old, but because of the way the system is organized.

 This “grey tsunami” rhetoric, as Martha Albertson Fineman and Stu Marvel write in Slate, “obscures the fact that Americans are paying the price for the lifelong effects of poor or absent healthcare options.” Compare the U.S. to Canada, whose citizens have free universal healthcare. In 2012 the Canadian Institute for Health Information reviewed 35 years of healthcare costs with a focus on the effect of an aging population. Contrary to the conventional belief that an aging population will overrun hospitals and drain healthcare budgets, the CIHI reported that elderly-related care actually added less than 1% to public-sector health spending each year, despite the fact that olders are proportionately higher users of hospital and physician services, home care, and prescription drugs. In other words, spending on seniors is not growing faster than spending for the population at large. A lifetime of governmental assistance has reduced the vulnerability of older Canadians to illness and disability in old age. Their American counterparts evidence the lifelong effects of a system that leaves the poor in the lurch, whether old or young: the people who need health care the most, so that they don’t get sick and stay sick. Note: lifelong. The consequences simply manifest over time.

The notion that older people are an inevitable sink for healthcare dollars is incorrect. Medical expenses are highest in the period just before we die, but that’s true whether we die at 18 or 80, and evidence suggests that how long we’re sick affects spending more than how old we are. The baby boom is the healthiest generation in history. One study of 22 wealthy countries (including the U.S.) actually found population aging negatively correlated with health expenditures. Rather it was people with debilitating illnesses or injuries—regardless of age—who drained the coffers. Preventive care mitigates or prevents debilitating disease. Fixes, some instituted in the Affordable Care Act and focusing on preventive medidine, will benefit all Americans.

One thought on “An aging population = higher healthcare costs, right? Nope.

  1. More on this important point, courtesy of H. R. Moody’s Teaching Gerontology Newsletter (Jan. 15, 2014):


          “Health care costs are high because we spend most of the money on old people in the

    last year of life.”

          This one can be dubbed ‘The Last Year of Life Fallacy’ because it confuses treatment for severe illness with unreasonable extension of life for people who are dying.  In fact,  it’s not easy to know when  ‘the last year of life’ will turn out to be.  When we look at the data in retrospect, it turns out that Medicare spends around 20% of its money on people who are the sickest, i.e., in “the last year of life.”  That proportion has remained about the same for two decades.  It’s another illustration of the familiar 20-80 rule: 20% of your customers account for 80% of your revenues.   

    Of course there are cases when dying people are unreasonably kept alive, just as there are many cases of undertreatment.   But we only identify “the last year of life” in retrospect.  For comparative purposes, in 2011 the National Institute for Health Care Management Foundation found that 5% of the U.S. population accounted for nearly half of all health care expenditures– another ‘discovery’ that those who are sickest end up costing the most.  Furthermore, contrary to the stereotype, after the age of 80 the use of expensive intensive care actually declines.


    For more on this Urban Legends, see “Myths of the High Medical Cost of Old Age and Dying,” by Cynthia X. Pan, Emily Chai, and Jeff Farber, International Journal of Health Services (38:2, 2008). 

          This report challenges commonly held beliefs about the financial and medical impact of older Americans during their last months of life. Written by physicians specializing in geriatrics, the report offers a wealth of data to refute seven misconceptions that currently influence U.S. health care policies: 

    (1) that the growing number of older people has been the primary factor driving the rise in U.S. health care costs; (2) that as the population ages, health care costs for older Americans will necessarily overwhelm and bankrupt the nation; (3) that putting limits on health care for the very old at the end of life would save Medicare significant amounts of money; (4) that aggressive hospital care for the aged is futile and the money spent is wasted; (5) that it is common for older people to receive heroic, high-tech treatments at the end of life; (6) that Medicare covers everything that older adults need in terms of their health care; (7) that if older patients had living wills or other kinds of advance directives, it would resolve dilemmas of how aggressively to provide care.



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