Asia-Pacific healthcare costs for elderly to jump from 500 billion to 2.5 trillion
The Asia-Pacific region will see an additional 200 million elderly people by 2030. The healthcare costs related to caring for the elderly across the region are expected to spiral from $500 billion per year to $2.5 trillion per year by 2030.
In a new report from Marsh & McLennan Companies, titled ‘Advancing into the Golden Years: Cost of Healthcare for Asia Pacific's Elderly’, the consulting firm explores trends related to ageing in the Asia-Pacific region. The region is home to the largest number of human beings on the planet, and the region is also the fastest ageing. The firm’s study involves 14 of the region’s major countries.
Growth in aged population
The Asia-Pacific region will see more than 200 million people join the 65+ group over the coming 15 years. The rate of ageing varies considerably between groups, however. In group 1, Japan currently has an elderly population accounting for almost 28% of its population, which is set to grow to 30% by 2030. Hong Kong, while far behind Japan at the present, at around 15% in the elderly category, will jump to almost 28% by 2030. Australia and New Zealand will see increases from around 15% to around 20%, while Singapore will see its aged population jump from 11% to 20%. Most of these countries will enjoy moderate or strong GDP growth in the interim.
Group 2 countries are expected to see the number of elderly increase from between 10-13% to between 17-24%. South Korea and Taiwan will see the fastest growth in the number of elderly, although China too will contend with considerably more old people than today. Group 3 countries will see relative low levels of elderly population increases; their relative GDP growth also remains subdued in the interim.
Fewer workers for support
The effect of ageing within the region is expected to have a number of effects on key economic factors, although the report highlights that the effects are not heterogeneous across the countries studied. Hong Kong, for instance, will see a considerable decrease in its working age population, which will fall by 13%. South Korea will also see a considerable decrease in working age people, set to drop by nearly 10%. Taiwan and Singapore will both see contractions, at -9% and -8% respectively. Australia and New Zealand will face a fall in their working age populations of almost 4% each. India, Indonesia and the Philippines are all expected to see slight increases to the number of working aged people, amounting to 2% each.
The changes in workforce sizes has the potential to exuberate the potential negative economic effects of large number of dependent aged people. Last year, there was one dependent aged person for every eight workers across the countries studied, by 2030, the ratio will fall to one dependent for every five workers. The ratio of dependents to working people is again relatively heterogeneous, as Japan’s ratio will fall from 2.3:1 to 1.9:1, while that of the Philippines will fall from 15:1 to 10:1.
More non-communicable diseases
Another area that shows considerable variation is the number of non-communicable diseases (NCDs), as a proportion of total disease burden. Diseases include cardiovascular diseases (e.g., heart attacks and stroke), diabetes, cancer, chronic respiratory diseases (such as asthma), and mental illness. While many of these diseases are outside of individual peoples’ control, some are not, while others are conditioned by contemporary social trends, such as economies set up to deliver sedentary lifestyles and promote and advertise poor eating habits.
The number of NCDs as a proportion of total diseases is either already very high, particularly in ‘developed’ countries, or on the rise. Many South East Asian countries have seen incidences increase from the high 50% to around 70% between 2000 and 2012 (highlighting that strengthening health systems are preventing more communicable diseases), while China has jumped from 66% to 76%. Only two countries saw a decrease between 2000 and 2012, Japan and New Zealand, whose incidence fell by 1% each to 81% and 77% respectively.
Rising costs to cover
Two additional areas of increased burden on healthcare systems are also part of the firm’s economic considerations, these include expensive long-term care and new medical trends – although additional factors, such as a lost productivity due to working people stepping out to care for parents and capex costs for supporting additional elderly are not considered.
New medical trends include the cost of new procedures and medicines whose prices are relatively high. These new methods assume that they are better at supporting old people survive into old age. However, the category also factors in the possibility that drug manufacturers and intermediaries will seek to leverage their barging power to price gauge, leveraging patent law to create coercive monopolies, countries whose duty is towards their old people – few countries have the bargaining power to negotiate fair deals, which could exuberate costs. Additionally, countries face the increasing burden of long-term care costs, as the number of old care-dependent people increase and family dynamics change.
The cost of changing demographics, increased reliance on long-term care and medical trends will see total healthcare expenditure jump from around $500 billion per year across the surveyed countries to more than $2.5 trillion by 2030. Commenting on the findings of the centre’s first report, Wolfram Hedrich, Executive Director at Marsh & McLennan, says, “The Asia Pacific region is ageing at a faster rate than any other region in the world. Key stakeholders, including governments, insurers, and individuals, are not fully prepared from a financing, infrastructure, and workforce perspective for the escalating costs of caring for more than 200 million additional elderly citizens in the region.”
