Douglas L. Wood, M.D.
Associate Professor of Medicine, Mayo Graduate School of Medicine
Vice-Chair, Department of Internal Medicine, Mayo Clinic
INTRODUCTION
I am pleased to introduce three distinguished individuals who will serve as panelists with me today. For a cardiologist originally trained in cardiac electrophysiology, that is the treatment of patients with heart rhythm abnormalities, it is indeed a special privilege to be on this panel with Dr. Earl Bakken. Dr. Bakken's company, Medtronic, has a long record of bringing technology to patients that improves function and quality of life and which sustains life by providing life-saving treatment of otherwise fatal conditions. His vision for the future is edified in his current project, the Five Mountain Medical Community.
I am equally privileged to introduce Dr. Hiroshi Nakajima, the Director and General Emeritus of the World Health Organization. Dr. Nakajima brings a special expertise to this discussion, specifically his understanding of chronic disease and the implication of chronic disease for health care delivery systems.
It is also my privilege to introduce Lt. Col. Rosemary Nelson of the United States Department of Defense.
OBJECTIVES
Our objective today is to better understand the implications of rapidly graying population that confront many economies in the Pacific region. An increasingly large proportion of the population of our nations will be over the age of 65 in coming years. Continued advances in medicine and health care, as well as improvements in social conditions and increases in personal income hold the promise of longer life spans. Though we could spend most of this meeting in a detailed discussion of topics related to the aging population, for this discussion, we wish to address four major questions:
1. What are the policy implications of aging societies?
2. How will these populations be cared for?
3. Are our existing assumptions about the role of government in providing assistance sustainable or realistic?
4. What are the key issues in health care industries?
HEALTH CARE TRENDS
Let me frame the discussion to begin this session. The graying of the population will significantly alter the composition of communities from a demographic perspective. These changes will also affect economies, social services and structures and the relationships between generations. Health care services will be more numerous and will rely on more and more new drugs and technology to improve functioning and lengthen life. Economies will be strained by the changes in health care; governments, insurers and private citizens will all struggle to find ways to pay for this expensive health care. The growing prevalence of chronic diseases will strain government and social resources, especially since many of the disabling diseases will be related to depression and other mental disorders which will stress community social services and other infrastructure since acute inpatient care is usually not an important part of the care of these diseases.
Heart disease will create an increasing burden on acute care hospitals, and chronic care. In heart disease especially, the application of new technology has a dramatic impact on the cost of care. For example, in the United States, the cost of cardiac care alone tripled between 1990 and 2000, reaching almost $170 billion in 2000. Coronary stents alone cost at least $1 million every day in the United States. This is a tremendous cost for insurers and government payers, but obviously represents a substantial market opportunity for stent manufacturers. Chronic heart disease is also expensive; the average Medicare beneficiary in the United States takes three heart drugs a day and each of these costs $100 a month.
Since the advent of the antibiotic era in the 1940s, the age-adjusted mortality has declined about 1.5%/years. In the last four decades in the United States, mortality from cardiovascular causes has been cut by half. The mortality rate has declined at an even greater rate in Asian nations. In general, men have higher age-adjusted mortality rates than women. Thus, women will outnumber men over age 65 and an increasing number of these women will be living alone.
The increase in longevity increases the likelihood of chronic conditions. Barring major medical breakthroughs for prevention or treatment of chronic conditions like Alzheimer's and arthritis, we can expect major increases in the number of older persons with medical problems requiring health and medical treatment, and functional impairments requiring long term care. Though these developments have the potential to increase overall health care costs, there may be an offsetting benefit. Specifically, success in improving functional status of older persons may help to reduce the need for services and making it possible for some seniors to remain in the workforce.
The disability rate is expected to increase substantially by 2030. Those over age 85 will experience the greatest adverse impact of disability, the older elderly experience twice as much chronic health problems as the rest of the population. This trend will require more health and medical services as well as more custodial care services and other support services.
In the United States, and in most of our nations, most long-term care is provided by family members, mainly spouses and adult children. However, these informal sources of care will be drastically altered by 2030 as the demographics of our communities change. The lower birth rate after the baby boom and increasing mobility of the population will reduce the availability of informal caregivers. The loss of this resource will have to be replaced with more social services, more flexible housing and more flexible care options in our communities. The financial cost of these alternatives will be greater than both the direct and indirect cost of the current system of informal care, placing greater strain on government budgets for health care and social services. Private insurance for long-term care will be used with greater frequency and it is likely that the elderly and their families will pay more our of pocket for long term care.
The impact of technology will be far-reaching. New devices for prostheses, new diagnostic procedures (especially imaging and genetic testing) and new drug therapies will create new cost pressures and tougher choices for patients, payers and governments. Rapid developments in information technology and communication will also create significant changes in how health care is delivered and many new market opportunities for companies seeking to exploit technology to improve functioning of the elderly. The management of certain chronic diseases like asthma, heart failure and diabetes may soon include daily measurement of physiologic parameters by patients in their own home. The data obtained from these small, easy to use devices will be automatically transmitted by modem to computers of physicians or other health care workers for evaluation and decision about intervention. New imaging technologies and new communication capabilities will mean that more services can be offered in remote areas. The Mayo Health Systems has developed a unique telecommunication system that allows real-time transmission of uncompressed video, audio and physiologic data which permits us to offer PTCA and coronary interventions at a hospital without cardiac surgical backup.
Can we be certain that our assumptions about the role of government in providing assistance are reasonable or realistic? We have considered the potential impact of the aging of the population and advances in health care, especially in relationship in utilization of resources. In the United States, health care expenditures for the elderly have outpaced GDP by 3-4 per cent per year in the last decade. Recent legislative solutions to reduce payments to providers have, for the first time, reduced this annual increase. However, there has been little change in per capita health care utilization and so the real impact of these reductions will be short lived. The assumptions made about spending in the United States may not apply to other countries for several reasons. The United States is alone among developed countries in having a health care system that provides care for only the elderly and in having such a large proportion of its population uninsured. The United States is also unique in its utilization of health care resources. In the GUSTO trial, a worldwide study of the treatment of patients with heart attack, the United States used twice as much balloon angioplasty and bypass surgery as all other countries. However, for all this reliance on surgery and coronary interventions, the death rate for heart attack survivors was not significantly lower in the United States than in other countries.
The financial impact of this increase in utilization in health care in the United States is staggering. Assuming current rates of growth, the annual health care consumption by a Medicare beneficiary would be $25,000 (in 1995 dollars) in 2020 compared to $10,000 in 1995. Assuming that the current public/private share of spending is unchanged, then a significant tax increase would be needed and the elderly would have less income.
To finance this significant increase in health care, there are only two basic options. The rate of spending growth must be slowed or alternative financing mechanisms must be found to pay for desired care. Spending growth could be accomplished with price controls (recently done in the United States with the Balanced Budget Act, though with some adverse consequences) or by reducing utilization of health care services. Alternative payment mechanisms could include tax increases, shifting more of the responsibility to beneficiaries and/or by reducing spending (both government and personal) on non-health items.
Ultimately, the challenge of managing the burden of chronic care will have implications for the health care industry as well as allied industries. The greatest likelihood of success will require that utilization of expensive care be reduced, but in a way that increases the functioning of older persons in order to have the greatest possibility of offsetting some of this expense by allowing people to work longer or to more fully participate in volunteer activities that would be beneficial for their communities. The impact on physicians and other health care providers, and on hospitals and other institutions will depend on the extent of price controls that may applied by governments and other strategies adopted by insurers or other payers. The increasing prevalence of chronic disease will provide substantial opportunities for companies involved in the development of prosthetic devices for treatment of musculoskeletal disease, heart disease and movement disorders, for pharmaceutical companies and for information technology companies that can support the development and expansion of telemedicine activities. New drug design techniques, coupled with advances in the basic science of neurologic and mental disorders (understanding the biochemical basis of cognitive dysfunction and depression, for example) as well as immunologic discoveries that will alter treatment of vital diseases (like HIV, hepatitis C) and cancer will also present exciting opportunities for pharmaceutical and biologic companies.