Impact of the aging population

on the health care system

Because of chronic diseases and increasing physical impairments requiring frequent health services, the elderly consume a disproportionate amount of health expenditures. As a result, the dramatic increase in the age of the U.S. population is likely to cause health expenditures to rise in the 1980's and well into the next century.

Consumption of health

services by the elderly

Although they comprised only 11 percent of the population in 1978, persons 65 and over consumed 29 percent of the $168 billion in personal health care expenditures.109 Reflecting the greater volume of health care services and the increased use of high-cost services, the average medical care bill for the 65 and over age group reached $2,026 in 1978, compared with $764 for the 19 to 64 age group and $286 for the under 19 group. (See table 6.) In 1978, per capita hospital expenditures for the 65 and over population ($869) were more than eight times the per capita expenditures for the young ($102) and more than twice the per capita expenditures for persons aged 19 to 64 ($370).110 According to one study, the average per capita health care expenditures for the elderly, w be $6,024 in the year 2000, compared to $627 for children.

Table 6

Distribution of Population and of Personal
Health Care Spending by Age Group, 1978

Percentage distribution

will

Source:

C. Fisher. "Differences by Age Groups in Health Care Spending." Health Care Financing Review, Vol. 1, No. 14 (Spring 1980), p. 66.

As shown in the table below, the elderly are hospitalized more often, stay in the hospital longer, and see their physicians more than the young.

Table 7

Percent of Persons Hospitalized, Days Per
Patient, and Physician Visits Per Capita,
Noninstitutionalized Persons by Age Group, 1978

Source:

Estimated from the Health Interview Survey as cited in
C. Fisher. "Differences by Age Groups in Health Care
Spending." Health Care Financing Review, Vol. 1, No. 4
(Spring 1980), p. 67.

Data for 1982 show that the elderly still remain in the hospital about 2 or 3 days longer than the general population.112

Further, the 75 years of age and older group uses substantially more services than other elderly persons. For example, the rate of use of nursing homes rises sharply with age within the elderly group as shown in table 8.

Table 8

Rates of Nursing Home Care Use by Age and Sex

The health problems faced by older persons are very different from those of younger persons, requiring more extensive and more expensive services. Heart disease, cancer, and stroke are the leading causes of death among persons over 65. The likelihood of dying from stroke, influenza, pneumonia, and arteriosclerosis increases dramatically in the 65 and over group.

U.S. population is becoming older

The U.S. population is becoming markedly older. The percent of the population 65 or older increased from 4 percent in 1900113 and 8 percent in 1950114 to more than 11 percent by 1980.115 By the year 2010,,14 percent of the population is expected to be 65 or older.116 Between 1984 and 2000, the 75 and over population is expected to increase four times faster than the under 65 population.117

Moreover, the population 85 years and older increased from less than 1 million in 1960 to over 2.5 million in 1980 (an increase of 174 percent) and is projected to increase to over 7.6 million by 2020 (an increase of 197 percent over the 40-year period).118

Source: D. Rice and J. Feldman. "Tables and Charts for
Demographic Changes and the Health Needs of the
Elderly." Prepared for the Annual Meeting of the
Institute of Medicine. Washington, DC: Oct. 20,
1982, p. 19.

The rapid growth in the elderly, particularly in the 75 and over population will create substantially higher health expenditures.119 Moreover, women generally live longer than men; thus, the number of aged women relative to the number of elderly men will continue to increase. Since people living

alone or without a spouse, such as elderly widows, have greater needs for long-term care assistance, this situation would place further demands on the health care system, such as increased use of nursing home services.

WHAT WILL BE THE FUTURE DIRECTION

OF THE HEALTH CARE SYSTEM?

In 1984, Arthur Andersen and Co. and the American College of Hospital Administrators issued a study of what the future shape of the American health care system is likely to be in the 1990's. The report's conclusions, based on a survey of 1,000 health care experts, revealed a high level of consensus on future trends. 120 For hospitals, the experts agreed, among

other things, that:

--Multihospital systems will continue to grow.

--Investor-owned hospitals will substantially increase
and will be more profitable.

--The emergence of new types of providers will reduce
the share of health care expenditures consumed for
inpatient acute care hospital services.

--Emphasis in health care will shift to ambulatory services and new alternative delivery systems.

--Hospitals may have difficulty attracting capital

financing necessitating the creation of new corporate
structures and business ventures to compete for
capital. 121

For physicians, the experts predicted, among other things, that:

--Prospective payment systems will be adopted for

physician payments which will reduce their income levels.

--The anticipated oversupply of physicians along with
the trend toward practicing in hospital-based
positions and alternative delivery systems will lessen
physicians' influence. This will also result in a
decline in the fee-for-service payment method.

--Increased fiscal restraints and use of prescribed patient care protocols will result in a decline in the professional satisfaction physicians will derive from their practice.122

For other providers, such as nursing homes, extended care facilities, specialty care institutions, and ambulatory care facilities, the experts foresee that:

--Greater use of less expensive alternatives to acute
inpatient hospital care will occur.

--More providers, both institutional and individual, will compete in the markets represented by these alternative levels of care.123

For the patient, the experts forecast that:

--Patients will incur a greater share of health

expenditures and their expectations of the health care system will have to be modified.

--Persons covered under governmental programs can expect many reductions in benefits and eligibility.

--Patients with private coverage will experience similar
changes, although additional levels of service will
124
be available to those willing to pay for them.

Besides these changes predicted in the Arthur Anderson study, another area likely to experience continuing advances relates to medical technology. The rate of technological advances is accelerating rapidly. The basic sciences of immunology, genetics, and physics are at a point where developing technologies permit earlier diagnosis and treatment of several major illnesses, including many cancers, coronary artery disease, renal vascular hypertension, rheumatoid arthritis, and cerebral vascular disease.

Current emerging technologies are being directed at detecting, arresting, or even reversing disease processes. Consequently, these technologies may serve to extend lives, relieve pain, or enhance the quality of life, and all possibly at lower costs. For example, technology has advanced to the point at which it may be possible to counteract arthritis, eliminating the need for many joint replacements. Similarly, nuclear magnetic resonance scanning may be able to warn of impending strokes, while refinements in the process of developing specific antibodies may result in substantial progress in the treatment of cancer thus reducing hospital surgery.

In the past, organized medicine has had a major influence on shaping the U.S. health care system. However, this situation is changing drastically. The future direction of the American health care system will likely be shaped by