Looking back on the Economics of Ageing

You may remember a couple of weeks ago we spoke about the Economics of Ageing webinar series. In this episode, we speak with Dr Jon Cylus of the European Observatory on Health Systems and Policies about the webinars and what comes next.

Show notes:

Where do we find the money to fund healthcare for an ageing population? [https://eurohealthobservatory.who.int/news-room/events/item/2022/01/18/default-calendar/where-do-we-find-the-money-to-fund-healthcare-for-an-ageing-population]

Can the costs of caring for an ageing population be controlled? [https://eurohealthobservatory.who.int/news-room/events/item/2022/01/25/default-calendar/can-the-costs-of-caring-for-an-ageing-population-be-controlled]

Is the politics of ageing creating conflict between generations? [https://eurohealthobservatory.who.int/news-room/events/item/2022/02/01/default-calendar/is-the-politics-of-ageing-creating-conflict-between-generations]

Transcript

Speaker 1: 0:00

Hello, welcome to the health and Europe podcast. I'm your host, Greg Bian. We've launched this podcast of bringing the latest on w H O's work in the European region. Our region is born and diverse from the MidAtlantic stretching. As far as the Chinese border, we work fascinating and driven individuals and groups. This podcast is about hearing their stories and how they might impact your day to day. Life. Conventional wisdom tells us that aging populations demand more resources, policy makers, a face of real dilemmas about how to keep health spending under control while ensuring people can still access healthcare. It's a policy issue that's caused plenty of headaches over the years, we recently spoke with Deborah Miranda, communi the European observatory on health systems and policies about a webinar series on the economics of aging. This wrapped up a few weeks ago. So we caught up with John Silas. Who's been leading this work at the European observatory. I started by asking for a quick reminder about what the economics of aging webinar included.

Speaker 2: 1:18

So, so this was, um, so maybe it's helpful actually to talk about up the, um, the history of the, of the series. So we started this a few years ago, maybe in, in 2016 or 17. And the, the, the real motivation here was that we found that, uh, every conference we went to every presentation, every policy dialogue, which start off with a discussion about how populations were aging. So, and that this was a problem, um, you know, whether it was about health financing or health workforce. Um, and so it made us wonder, well, is this actually true? Is there really an evidence base for this? So we decided to create the economics of healthy and active aging series to do research on, on myths about population aging and how it affects economies, societies, um, and households. Um, and obviously our focus is on, is on the health system. And what we found is that most of the evidence on how aging affects, um, uh, health systems, how it affects economies is, is nuanced at best. And oftentimes, um, what we think we know about how aging affects these things is, is not necessarily not necessarily accurate. So that was the main, that was the main, um, the main driver behind this series. It was really about myth busting, um, and about understanding the then once we were able to get past these myths and understand a bit more, why, um, a bit understand a bit more, how aging affects, uh, health systems and economies and societies, then we were able to shift towards understanding policies, um, that countries are putting in place to support an older population. Great.

Speaker 1: 3:03

That's really interesting about that kind of building up the evidence base and, and seeing, yeah, cause I mean, you obviously hear a lot about population aging, but I guess it's important to look into it as well, but, um, uh, just returning to the webinar series that, that happened recently, what was some of the themes that, that came out, um, about these webinars and, and how we can fund healthcare for older generations?

Speaker 2: 3:24

So, so we, we split the webinar series into three pieces. So, um, we had a first webinar that was on aging and revenues, so where the money comes from for health, um, and this one really focused on, um, the myth of the, that an aging population is bad for the economy and that this means of course, that you'll have, uh, a, a less productive labor force that will pay fewer taxes. And this will mean a smaller public sector. And of course, if you have fewer revenues, uh, for health, it, it, it suggests that the only solution is to, to cut back on spending. And so what we focused on in that webinar was really on, uh, well, is it true? Does an older population really mean that the economy is going to slow? And we presented some evidence showing that it's not so much the age of the population that matters, but really the health of that older population, especially the older workforce that matters for the, uh, for the, uh, the, the, the relationship between aging and the economy. So if you have a healthy older workforce, you don't necessarily see these slowdowns in, in growth. But what we did focus on in that webinar was really that the countries that, that of course, the countries that rely on labor markets to finance health, so countries where you pay, uh, social health insurance contribution, um, and where this is the predominant source of financing, these countries could potentially face trouble over the next 20, 30 years as the labor market shrinks because of people leaving, uh, the labor force due to retirement. In the second webinar, we focused on the, so the first one on the revenues on the second one, we focused on expenditures in aging. Um, and of course, people assume that an older population will accelerate health expenditures because older people on average cost more to provide health to healthcare too than younger people. Um, and while that's true, uh, aging is really slow. And so, so the population of the aging rather is, is very slow. And so if we look at how, uh, an aging population affects health expenditure growth, how expect, uh, how it affects trends over time, we actually see very little effects. So if, if your average country, uh, health spending per person grows two, 3% per year, historically, uh, aging at the most will add maybe a half a percent of growth. So it's a very small component. Um, and so this idea that aging will, will accelerate health expenditure growth is, is really overblown. Um, and of at the same time, much of this relationship between, uh, aging or sorry, the age, uh, of, of a, of a, an individual and health spending, uh, and the fact that older people, uh, spending on older people is generally higher on average than younger people is due to the, the costs at the end of life. Um, so, uh, uh, there's a huge difference at any age, uh, in health spending, uh, between when you compare people who are in the last year or last six month of life, compared to someone who survives the same period, uh, if you match them to someone very similar. Um, and so what that really, um, suggests is that if we want to, if we're still worried about this extra half a percent of growth due to aging over the next per year, over the next 20, 30 years, the, the focus of our attention should really be on care at the end of life. And making sure that this is, is rational, that this is, um, care that is improving people's quality of life, that this isn't just sort of, um, wasted, unnecessary spending that people and their families do not necessarily want. Um, and, and then the third webinar. So of course, like I mentioned, at the beginning, the, these the series is really focused on myth busting, and we've sort of come to this conclusion that the aging is not such a big deal for, especially for health systems. Um, in terms of that, it's, it's a, it's a, a manageable challenge. It's not this sort of, um, the silver tsunami as people like to refer to. Um, and so our big question in the third webinar is, well, why do we act like it's such a big problem if it's not, and what can we do about it? And this really focused our attention on, on the politics of aging and, and sort of the political economy factors that, that drive to decisions about, um, policies that affect older people, as well as younger people.

Speaker 1: 7:42

Brilliant, thank you, dust. That's a really good overview of, of kind of the, yeah. Where it's come from and, and where it's headed, I guess. I mean, um, and I think, uh, when we spoke to Deborah recently as well, she, she made the point that, um, kind of spending shouldn't be seen as, you know, it's not, you wasted, you're actually improving these people's quality of life, which in turn has, has kind of a, a longer term benefit as well. Um, uh, I mean, in terms of kind of what, what happened in the webinars themselves, was there anything that particularly surprised you or any, any examples that jumped out that, that could inform future of this work?

Speaker 2: 8:18

Sure. Um, well, in the webinar on expenditures, we had some interesting discussion about the use of robots, um, for, for looking after older people, which I thought was really interesting, um, and unexpected, but I think, you know, looking back at the whole, the whole series and the webinars in general, I think perhaps the most, um, surprising finding for me came from the, the, the work that's linked to the third webinar on the politics of aging, and really this idea that, um, that the challenge, you know, I think one of the jumping off points for a lot of this work is this idea that there is sort, sort of intergenerational conflict, right between old and young. Um, and that it's really the, the differences between people by age that matter, that sort of, that fuel this conflict and that this is really, you know, it's, you know, whether in some countries, it seems as if older people get all of the policies that they want, uh, when other countries may be older, people are ignored and it's really younger people, um, that are, that are benefiting from benefiting from the welfare state. Um, but what I, what I found most interesting is that the, the inequalities within generations are, are much larger in, in countries than they are across generations. So it, it's not to say that there's not conflict and there's not differences. There's not, um, there aren't challenges that come from disparities, but they're not age related, they're income related, they're race related, they're gender related. This is really where the, the bulk of the, the inequalities that we see are, it's not so much an age

Speaker 1: 9:52

Thing. So just to make sure I've understood that correctly. So it's basically saying that addressing those inequalities earlier in life would actually have a better impact later in life, as opposed to just putting all of your funding towards later life care is, is that, am I understanding that correctly? No,

Speaker 2: 10:06

That's that's right. And actually, what, what we, we, we talk about in the, the book on the politics of aging is really about how these inequalities also contribute to, of course they contribute to in inequalities in health, but they ultimately contribute to inequalities in terms of who gets to be old. So when we talk about aging, I think our, our, our, uh, our tendency is to think that we're talking about older people, but really we should be thinking about the whole life course. And that investments at all ages are really essential if we want people to age in good health. So us to be, um, not just to focus our attention on people once they're already old, but we really need to pay attention to people at all ages, if we want people to, to, to age in good health and

Speaker 1: 10:46

Brilliant. And, um, I mean, you, you mentioned at the start of this, um, about, you know, how this kind of came about from a few years ago now that this kind of particular webinar series is finished. What's, what's next for the, what, what can we expect to see?

Speaker 2: 10:58

So we have right now, we're working on a book, um, uh, on long-term care, on making the case for long-term care for investments in long-term care. And here, the idea here is that, that we've noticed that while that there's obviously there's a disconnect between health systems and long-term care systems, any countries, even though I think people recognize that long-term care is of value. There's not as much attention, at least amongst the, the health policy community focused on long-term care. Um, and so we really wanted to, to make the argument that investing in long-term care is, has a lot of benefits, not just for the care recipients themselves, but also economies, um, for health systems, for societies, for households. And so we really wanted to, to, so the purpose of this book is really to show that that actually, when we think about long term care, I think a lot of people, um, think about this as, as, as, uh, a sector for a very small portion of the population, but actually we should realize that there are a lot of spillovers. Um, and a lot of everyone stands to benefit from investments in long-term care. Um, so whether it's people being able to join the formal labor market, because they're not at home caring for a family member, or whether it's, um, in countries where there's, um, means testing for long term care so that people don't have to bankrupt themselves before they're eligible for some sort of, um, some, some services it's really about focusing our attention on that. You know, this is really long term care matters for everybody. We're also, uh, working on again, making in, in, in the, through the lens of making the case for investments in, in services for older people, we're doing some work looking at, um, at the, the value of investing in health at older ages. So of course, if we look at health at you know, of the older working ages, it's very easy to make a, a link, an economic link to people being able to participate in the formal labor market. And there's obviously there's something quantifiable there, but once we get it to older ages, people in their, their, their eighties and late seventies and their eighties, it's much harder of course, to, to show what the tangible, um, quantifiable benefit is. And so what we're trying to do here is develop new metrics that allow us to see the benefit of good health at older ages. And so to do this, we're using time use data. So these are, uh, surveys that countries do where they have people record, how they spend every minute of their day over a, a full day or a two day period. You can see the difference, uh, between people at different ages that depend on their health status in terms of how they spend their time. And so this enables us to see, well, maybe an 85 year old in bulk area, who's in good health, has a much more active life. They're able to see family. They're able to go out shopping. They're able to do gardening they're to volunteer. Whereas someone that's in poor health is spending much more time on regular activities of daily livings. Maybe they spend much more time showering, or they spend much more time, um, getting ready for the day. And of course, this is there's, there's, there's something to be said here for the, the, the quality of life that someone of course has at an older age, that's maybe not necessarily quantifiable in economic terms. Um, but we're also trying to make that leap from the time use data to monetary values and understanding, well, what's the value, what's the actual economic value of, of being in good health at older ages, based on the way you spend your time. So that's, that's upcoming work that we're, we're, we're that we're, we're making progress on.

Speaker 1: 14:35

That's really thing. I hadn't really thought about that, but I guess it could also even extrapolate out to say, you know, if you're in good health in your, your older age, you're gonna start traveling and, and seeing things and spending money and, and doing things like that, I guess. Right. So it's, uh, yeah,

Speaker 2: 14:49

That's that's right. And that, no. And, and just to say on, on that point, you know, there's, um, we were, I think it was for the EU presidency of Finland a few years ago, and there was a lot of interest in the so-called silver economy. Um, because of course, older people, especially in, in, um, in higher income countries, they accumulate a lot of assets assets over the course of their life. And so this is a time when they are, they are dis saving, they're spending down those assets. And so of course, if they're active and they're able to be out and spending money, then this is obviously has a beneficial effect for the economy. And it's not necessarily, uh, as easy to quantify as, as, as something like labor, which is, I think, where we think, you know, normally when we think about, about, um, people we think of about them from a production perspective that they are, you know, are they, are they in the producing phase of their life? And so children, you know, even when we think about something like a dependency ratio, this is really looking at the size of the working age population relative to the size of HIL, the population at, uh, uh, that are children and that are over the traditional working age. Um, and this is because we think about the working ages they're producing and the, the others are just consuming. And so it's important to recognize that consuming also has important economic value as well. And so this is what this is really, you know, just gets back to the heart of what we're trying to shed light on, which is that, you know, aging obviously, um, implies changes in health systems, implies changes in economies. It implies changes and all the things, but they don't necessarily mean the, you know, the, it's not a, it's not a disaster. It's really, these are, these are, these are, uh, manageable challenges that can be dealt with through policy interventions.

Speaker 1: 16:49

That's all we have time for special. Thanks to John for speaking with us. If you'd like to find out more about the economics of aging series, visit the European observatory website, that's Euro health, observatory dot w H O dot I NT, or check out the links in the show notes, make sure to leave as a rating. And if you like what you've heard, recommend us to a friend or a colleague, thanks for listening. And then to a next time, stay safe and stay healthy.