Why Should Policy Makers Be Interested in the Demography of Aging - Essay Example

WHY SHOULD POLICY MAKERS BE INTERESTED IN THE DEMOGRAPHY OF AGING? al Affiliation The policy making processshould draw its attention to the aging population. According to World Health Organization (2015) the proportion of world’s population over 60 years will increase from 11 to 22 percent by 2050. There are at least 605 million people aged over 60 years, but the number is expected to double in the next four decades. The proportion of populace aged over 65 years in the total population in UK is projected to increase from 17 to 24percent between 2010 and 2051. The proportion of people over 85 years is increasing at a fast rate and is predicted to ascend from 2% to 7% in the same period (Ons.gov.uk, 2015). Additionally, the absolute numbers in England should raise an alarm for policy makers due to the increase from 7.8 million people aged over 65 years in 1996 to 12.4 million by 2031. An increment of 60% is overwhelming proportion when compared to other age group structures in the UK population. National Health Service (2015) report per capita consumption of health care by older people is 3-5 times higher than for young people. The report also indicates that People over 65 years in England occupy two-thirds of the hospital bed-day. The costs come from the burden of dealing with dementia, chronic heart disease, stroke and cancer for the older generation (NHS, 2015). The reported healthcare cost does not take into account the continuing care for the young generation provided within the hospital and home settings. Therefore, it is assumed that continued population ageing will inevitably result in increased healthcare costs. United Kingdom performs better in terms of life index and overall well-being. OECD estimates that 71%percent of people aged between 15-65years have paid jobs. However, the UK total fertility has been 1.8 children per woman since 2001 but the ONS has confirmed that the rate has fell below threshold replacement level in 2012. Therefore, there will an imbalance between the young and the older generation in the economy. The UK current welfare operates on the principle that the text and pension contributions of a large workforce fund the National Health Service (NHS) and the pension requirements of the retired segment. The statistics highlighted have resulted in 3.2 people of working age for every person of State Pension Age (SPA) or older. The working age is projected to fall to 2.9 by 2051. The parliament also estimates 10.7 million people expect inadequate retirement incomes leading to a problem in retirement and pension benefits for the older generation by 2051. Therefore, population ageing has evoked concerns about the ability of the society to fund the increasing health care and pensions costs. This paper will focus on long-term implications for healthcare and pension needs and provide possible policy responses to confront the problems and opportunities presented by the population ageing. Longer Life and Implications on Health One of the primary causes of population ageing is increased life longevity. Longer life is also a measure of adaptability of the healthcare systems to demography changes (Fahy et al., 2011). The rapid increase in the population ageing translates into more health needs and demand for care for older generations. There was 80% life expectancy improvement between 1984 and 1989 due to a reduction in cardiovascular and cerebrovascular mortalities (OECD, 2015). The improvement was also closely linked to a quality lifestyle where individuals embraced cessation of smoking and uptake of physical exercises. The advent of medical intervention such as the introduction of statins gave rise to the higher life expectancy than a decade earlier. According to OECD, overall life expectancy at birth is 80 years with women expected to live longer than men since 1960. Simultaneously, there has been a remarkable reduction in mortality from diseases such as hypertension, stroke and cardiovascular diseases. World Health Organization estimates 70% reduction in mortality rates in the world. World Health Statistics (2014) reveals that people are living much longer worldwide due to a reduction in death rates from 83% to 51% for the period between 1990 and 2013. The declining fertility rates and a demographic shift in global population to old ages of over 65 years have been the leading cause low mortality rates. Healthier lifestyles and medical advances in England and Wales have led to decreasing in mortality rates by 60% in the past thirty years (Office for National Statistics, 2015). The annual death registrations were below half a million in 2014. However, longer life has implications for overall health due to increase in older generations (Fahy et al., 2011). OECD estimates that over-65 age group attracts 40-50%percent increase in overall health spending. The per capita healthcare costs for the over-65 age group is 3-5 times than those less than 65 years. A large part of government budgets on healthcare expenditure might increase and lead to overall increase in public expenditure. The age group also demands medical assistance and ample social services to promote healthy aging. With the increase in the population ageing, associated diseases such as dementia, diabetes, hypertension cancer and arthritis are likely to increase. The dementia cases in the world averaged at 35.6 million in 2010, but there are 850,000 people with dementia in UK today (Office for National Statistics, 2015). The number is projected to increase to 1 million by 2025. Alzheimer’s Society in UK estimates that the government will spend at least 11 billion annual to offer hospital and home care for older people with dementia. The proportion of life spent in severe disability is greater for elderly women than elderly men due to high life expectancy advantage for females. Long-Term Care for the Elderly Long-term care for the elderly is also a healthcare concern (van Solinge and Henkens, 2009). Demographic changes have elicited the need for long-term care provision for the elderly across EU nations. Long-term care is focused on improving the quality of life for individuals with chronic conditions. The overall public expenditure in EU countries may grow the 10% of GDP between 2013 and 2060 (Ec.europa.eu, 2015). European Commission expects that the health care systems are prepared to offer the care for the ageing population and maintain a balance in public expenditure budgets. There will be a shift in the provision of long-term care for elderly people. The increase in public expenditure will increase due to government involvement. Currently, the service comes from family members and friends. Diabetes, cancer and dementia are a source of long-term care concern in UK due to the projected increase by 76.7% in men and 65.5% in women by 2030 (The Lancet, 2014). According to King’s Fund Report (2014), the fragmented healthcare system in UK does not meet the needs of the older people adequately. The coordination of long-term care and delays may create a discrepancy in transition between healthcare and long-term care systems (Oliver, Foot and Humphries, 2014). The concerns of population ageing evoke informal family care. England is one of the economically developed countries whose long-term care is reliant on informal care. The future supply of informal care is projected to fall by 2032 and will require policymakers to consider long-term care funding options to respond to societal, demographic and sustainability changes (Pickard et al., 2012). Long-term cares needs for older people suffering from dementia and physical disabilities present a global threat in the 21st century. Pickard et al. (2012) estimate that England has approximately 2.1 million people aged over 65 years with dementia and disability cases living in private households. The risks of widowhood and disability will also increase by 85% by 2032 which will call for intervening long-term care needs. The Department of Health gave national guidelines, but they are short of residential and hospital long-term care needs based on the National Health Service elderly needs estimates. Costs of Healthcare for an Ageing Population The sustainability of pensions and long-term care systems are dependent on the ability of countries responding to the inevitable costs of an ageing population. There are reforms underway to rectify the discrepancy between older and young healthcare provision and the overall costs of maintaining an older generation are inevitable. OECD projected a potential increase in the health expenditure per person based on the Eurostat data in Europe. There will be an increase in 0.7% of GDP on health expenditure and the yearly cost per person might change by the end of 2060. Malley et al., (2011) research estimated the projections of future on long-term care services for older people In England will change by age and gender by 2032. The study estimated that the healthcare expenditure will take up 4.7% of the GDP in England, and the rate will increase by 1.6% by 2032 (Malley et al., 2011). The study did not take into account disability rates, care patterns and policy changes on the cost of care given to older people in England. Therefore, the affordability and sustainability of healthcare costs is a huge concern that requires policymakers to reconsider and reform policies for the older people. Additionally, the rising population ageing imply an increase in the dependency ratio. The recommendations established by the Commission on Funding of Care and Support have not been implemented to create a connection between pensions and long-term benefits for older people in England (Gov.uk, 2015). Europe Commission has acknowledged that individual states should not concentrate on the demand for healthcare and long-term provision for ageing population alone. The health expenditure has grown faster than national income in all EU countries which calls for reforms within education, healthcare services, environment and lifestyles. Figure 1: A graph is showing an increase in public health expenditure (European Commission Report 2015). Pickard et al. (2012) found out that the cost of informal care for older people with functional disabilities might decrease because of childlessness. The number of older people with children in the past twenty-five years has decreased leading to a shift in informal care offered by family and friends. The Department of Health will be charged with offering care for fragile cases for older people without kin and spousal or partner care in England. The number of older people who will receive care as a result of low informal care cases will be 1.2 million of the average population in England. Seshamani and Gray (2002) noted 5% decrease in the proportion allocated to the population 65 years and over in England and Wales whereas other developed countries such as Canada, Australia and Japan apportion at least 34% for healthcare systems for the older generation. Policy Responses to Promote Health and Contain Related Costs Policy makers should draw attention to actual demand drivers for healthcare costs without focusing in age-specific per capital expenditure established in the literature. Oliver, Foot and Humphries (2014) acknowledge the increase in the healthcare projects for ageing population in UK based on Office for National Statistics reports. However, the ageing population presents economic and social benefits for UK economy too. The spending power of older people will grow with 68percent by 2030 which can increase the taxpayer base in the economy. Policy makers should focus on healthcare policies that increase the quality of health to keep the members of the society engaged. A retirement benefits reform for the ageing population can reduce the projected healthcare costs. 10.7 million People in Great Britain expected inadequate retirement incomes, and that could require the state to consider funding formal or informal care. The Committee on Public Service and Demographic Change 2015 report established that 30% of older people volunteer informal organization (Gov.uk, 2015). The late life expectations influence the retirement decision-making process. Employees aged over 65 years with high life expectations intend to work longer because of the related benefits (van Solinge and Henkens, 2009). Retirement benefits will give age group financial capability and give rise to an older population that can deal with personal financial pressure. 71% are satisfied with financial circumstances, but the money they get does not provide an adequate cushion for income shocks and long-term care costs needs. The retirement reform policies should also focus on financial management for older people because a significant percentage does not maximize its income. 45% reach retirement with outstanding mortgage and debts which prevents them from catering for future costs of hospital or formal residential care in case of health problems (Oliver, Foot and Humphries, 2014). The rising population is ageing proportion demands for reform pension schemes (Rechel et al., 2013). EU countries population increases for over-65s mean that more people will claim benefits for a longer period. Statutory retirement age remains the same despite the recent demographic changes. In UK, the retirement default retirement age was abolished in 2012 but there are 1 million people over 65 years in the current workforce anticipating for pensions. The policies should be geared towards encouraging saving to guarantee older people a secure people without overburdening the generation between 18-64 years. The Department of Work and Pensions has enrolled millions of worker in the State Program that started in 2012 (Gov.uk, 2015). The reforms should take effect in both private and state pension systems to realize a robust system altogether. UK has experimented different models for the older age group by allowing them to extend their working time and preserve their pension entitlements (Rechel et al., 2013). The Department of Work and Pension should also extend the working period for the older generations (Gov.uk, 2015). Only 30% percent of people over 65 years are in the workforce, and they have roles to play in the economy and society. Extension of working period should be accompanied by flexible working conditions and pension freedoms. OECD has acknowledged the shrinking taxpayer base which might put pressure on the economy due to outstanding healthcare expenditure across all income groups. OECD (2015) also estimated that extending the working period will increase the retirement age that stands at 1.2 years every 10 years. The increment can stabilize the dependency ratio of the older generation without jobs or savings after retirement. Additionally, getting older people back to work will also reduce the dependency ratio. There are 12 million retired people in UK who can become available for informal care. Working beyond the age of 65 years will offer financial boosts to individuals and the entire economy. The reform will also help to overcome stereotypes about older workers and ageism that prevent satisfactory lifestyle for older generations. Rechel et al. (2013) propose promotion of healthcare and disease prevention strategies. The intervention should be population based to assist in coping with ageing population across Europe and UK in particular. Healthy and active ageing increase the intention to work more in the labour force. The primary intention should encompass reduction of smoking, poor diets, alcohol consumption and improve overall conditions and care. According to Rechel et al., (2013) physical activities should be incorporated to reduce the risk of hypertension, depression dementia and degenerative diseases for people between 45-85 years. A key platform for long-term care strategies is the number of older women in work who does not have the innate capacity to offer care. Healthier older generations will become available for the care besides offering high work productivity beyond the current retirement statutory age (Gov.uk, 2015). Policy makers should not be concerned with health care for the ageing population in isolation. Martín, Puerto López Del Amo González and Dolores Cano García (2011) carried out a study to investigate the principal determinants of healthcare expenditure. While healthcare is relevant for NHS when considering the changing demographic trends, there are other significant factors that will assist in meeting the healthcare challenge. The research delved into past studies on healthcare expenditure determinants and found out that the ageing population was important in policy making. However, a focus on other variables such as technological progress must also be put into consideration due to their effect on econometric trends. The ageing population is not a principal factor in the health care expenditure, but its increasing significance cannot be ignored. Rechel et al. (2013) argue that minor changes will have a substantial impact on the healthcare system. Increasing the life expectancy in all age groups while promoting key drivers of healthcare expenditure will reduce the projected increase in the projected expenditure costs. Czech Republic, Hungary and Demark have implemented work-pension arrangement and flexible terms that encourage quality ageing. Conclusion The ageing population is unprecedented and presents new healthcare challenges. The projected increase in health, long-term care, welfare systems do not present a fundamental threat to the healthcare systems in UK and other developed countries. The projections are a wake-up call to the policy makers who should consider reforms that can meet the needs of the ageing populations. The statistics are startling, but they should not raise an alarm because there are economic and social benefits associated with population ageing. However, policy making process must amplify the provision of long-term care and promote strategies in both private and public institutions. The reform will grant the older generation the physical independence and tools to confront the financial and virtual landscape. Additionally, financial recognition and caregiving support will reduce impairment and encourage the older generation to work in a flexible environment. Health economists have established that demographic factors account for a minor spending in the ever growing healthcare spending. Overall population increases drive demographic changes, lead to the growth of national wealth and developments for medical technology and care. Reference List Ec.europa.eu, (2015). Health care and long-term care - European Commission. [online] Available at: http://ec.europa.eu/economy_finance/structural_reforms/ageing/health_care/index_en.htm Fahy, N., McKee, M., Busse, R. and Grundy, E. (2011). How to meet the challenge of ageing populations. BMJ, 342(jun20 1), pp.d3815-d3815. Gov.uk, (2015). Reforms to state and private pension systems - Speeches - GOV.UK. 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