The Emerging Health Care Market in the Post-Welfare State
Hiroshi Nakajima, MD, Ph.D.
Director-General Emeritus, World Health Organisation
President, International Research Institute of Health and Welfare (Tokyo, Japan)
I believe that the rapid aging of our population and technological development, no only in this region but around the world, are driving a process which will restructure health care services, industries and financing at the local, national and global levels. As the session synopsis noted, medical advances offer the potential for considerable further increases in life expectancy. However, governments everywhere are acknowledging that they cannot give unlimited public support to health care where this means imposing over greater financials burdens on a shrinking workforce. Thus, demographic change means that the future holds greater needs (demand) and less public funding for pensions and health and welfare services. This is a complex issue, and I want to use the brief time I have to look at the following three aspects of it:
1. Expansion and diversification of the health care market: supplier-providers and consumers
2. Financial implications for families, enterprises, communities, nations and the world of changes in the roles and responsibilities of the public and private sectors
3. Globalization of trade in the health care market
1. Expansion and diversification of the health care market:
New technologies support a longer, disability-free and higher quality of life with improved care of the elderly to enable them to live satisfying lives despite multifaceted diseases and dysfunctions. Innovative therapeutic and functional (i.e. Viagra) drugs will be introduced, based on knowledge of receptors, the human genome and DNA analysis. Diagnostic methods will improve - using molecular biology, genetics, improved imaging (including new kinds of endoscopy and near infrared trans-cutaneous biochemical analysis) and software ("web browsing diagnosis"). These new technologies will work best in "hospitals without film" and "evidence-based hospitals" where the norm will be safer, less traumatic, minimally invasive surgery and telesurgery with lasers, infrared, protons and photons replacing the surgical knife. There will be further development of gene therapy, organ transplants (including xeno-transplants, artificial organs and organs grown from stem cells) and functional aid instruments for eyesight, hearing and movement. Reproductive health care will increasingly adopt the life cycle approach with pre-pregnancy and pre and antenatal genetic counseling and fetal surgery becoming more pervasive. The rapid pace of health technology development is promoting large-scale corporate mergers and start-ups of innovative venture companies. However, the ultimate commercial potential of new technologies, many of which are expensive, will depend on what people can afford, for public financing of health care is shrinking as the ratio of working/dependent population declines.
The needs of aging societies will restructure the market. For example, the World Health Organization's classification of medical services currently includes few disease prevention and health promotion services. Yet with tightening budgets, funds must go to cost-effective health promotion ahead of our cure/care. Insurers and health care managers are likely to offer monetary incentives to clients to adhere to lifestyle and disease prevention guidelines and to perform self-care, monitoring and diagnostic procedures and keep records. Thus, I believe there will be growing markets for preventive medications, fitness, health foods, stress control (including psychological and spiritual counseling), self-help for obesity and substance abuse and self-screening, monitoring and care. Drug and convenience stores may become health education, training, and monitoring centers, selling first aid and limited emergency care as well. Insurance agents, investment counselors and lawyers may become life design advisers to help clients think through their purposes, goals and responsibilities in life, realistically, and plan how to fulfill them with limited means.
Among the growing elderly population, I believe demand will rise for products and services to help seniors stay autonomous and avoid institutionalization, which will remain and undesirable and expensive last resort for elderly care. Thus we can expect rising demand for specialized transport and locomotion (including sports, leisure, travel and tourism), daily well-being and support services, care supplemental to that which families can supply (including hourly and day care), visiting and tele-medical services, home delivery of meals (including special diets), household items and pharmaceuticals and home banking, information, communications, education, exercise and entertainment/culture. There is likely to be a market for combined care and product-delivery services.
I believe the diseases of an aging society such as asthma, osteoporosis, diabetes, cancer and cardiovascular and Alzheimer's disease will mobilize political pressure for research and environmental clean-up to reduce the suffering and health care costs from these diseases, and, finally, I believe globalization of the health market will mobilize political pressure for portable health benefits to enable the individual and the insurer/health care provider to take full advantage of a global, competitive health market.
2. Financial implications for families, enterprises, communities, nations and the world of changes in the roles and responsibilities of the public and private sectors:
Retirement ages are being extended and pension and health benefits capped at lower levels. Thus individuals and families have a growing incentive to seek cost-effective health maintenance regimes and to solve their own problems and care for themselves and each other as much as possible. In America it became popular for well-off seniors to retire in Florida. In Florida the unusually large percentage of elderly residents stimulated the development of local health care industries. The general increase in the percentage of elderly everywhere has been called "Floridization". In Japan the trend is somewhat different as the elderly have tended to stay put in a traditional family home in the provinces or in an old neighborhood while adult children move out to new housing developments, usually as convenient as they can afford for commuting to work. Thus some areas in Japan have 65+ populations of 40 percent or more. In a country where publicly supported health care is substantially locally financed, these communities face growing health care costs for seniors with a shrinking tax base due to loss of working population. They are in serious crisis which can only be solved by reforming health care financing, in my view, in the direction of individually held, portable insurance accounts which will essentially enable the individual to manager his/her own health care.
The most important country in the region and the world in terms of health care financing in an aging society is China. This is a success of the achievements in public health of the government and people of China since 1949. The Chinese model, however it evolves, will be very influential in the organization of the market, especially in this region of the world, simply because of the very large number of people concerned.
3. Globalization of trade in the health care market:
Information technology has given the resourceful patient a global reach for information on health. A substantial, mostly unregulated, Internet market has developed for medicines and health products. Large numbers of American seniors visit facilities in northern Mexico to purchase excellent quality denial and other health care services and medicines, not covered by their insurance and available in Mexico at far lower costs than in their stateside communities. Small countries with comprehensive health coverage, such as Kuwait, send patients for major surgery and rehabilitation to countries like the Philippines in order to reduce public expenditure on health care. If World Trade Organization negotiations to liberalize trade in services (GATS) make significant progress in the health sector, health professionals, health insurance companies, health management organizations and hospital chains will be able to operate worldwide. Standardization of health professional qualifications, licensing examinations etc. will globalize medical education, enabling health professionals to pursue their studies and upgrade their qualifications via teleteaching methods in whatever country they happen to be working. Through tele-medicine, patients will be able to access the knowledge and opinions of the leading world specialists, or, alternatively, seek low cost medical consultations within a limited health care budget. They will be able to obtain treatment and even long-term care of good quality in lower-cost, developing countries provided they have the funds or portable insurance benefits. A free and highly competitive health market will be able to offset to a considerable extent reduced levels of publicly supported health benefits provided that portable insurance and privately driven health care financing schemes develop to fully exploit the possibilities of free trade in the health care market. This is another reason I believe that the evolving health care market wil mobilize political pressure for globally portable health insurance benefits, both public and private.