The difference between life expectancy and healthy life expectancy might sound like something that is only of interest to healthcare professionals but it actually lies at the heart of much of our political debate. Questions about the sustainability of public finances, how much tax we will need to pay in the future, how far and how fast public service spending should be cut, intergenerational fairness and even how many immigrants the country needs all depend on the rates of ageing and healthy ageing.
Our long-term fiscal challenge is essentially a health spending challenge. Every year, the OBR produces a report on the UK’s long-term fiscal sustainability which says that upward pressure on public finances means that, even if the government’s public spending cuts are implemented, the country’s debt-to-GDP level will start to rise again in the middle of the next decade. Michael O’Connor put the projections from the most recent report on a single chart. The OBR’s Central projection for public debt (the black line on the chart) is based on a number of assumptions. If these turn out to be wrong, that would change the forecast. As this chart shows, higher or lower interest rates, different rates of migration and a change in pension policy could all increase or reduce the likely amount of debt over the next 50 years.
Of all the variables, though, nothing has as much impact as health productivity. The OBR’s central projection assumes that NHS productivity increases by 2.2 percent per year. Over the last 30 years or so, though, it hasn’t come anywhere near that. The OBR estimates health productivity has improved at 1.1 percent since 1979, a rate which, if it continues, will not be enough to counter the health service’s increased costs over the next 50 years. This would therefore push public debt up to around 190 percent of GDP (the pink line on the chart), close to the IMF’s fiscal danger zone.
Increased demand has made healthcare costs outstrip economic growth in most developed countries and most forecasts expect that to continue as populations get older. The OBR refers to the European Commission’s report on ageing which forecasts that the UK’s annual health spending will grow by only 1.5 percent of GDP over the next 50 years. (The OBR believes this is too optimistic.) The IMF, in its recent Fiscal Monitor report, forecast an extra 2.4 percent of GDP by 2030. The OBR’s central projection says another 1.7 percent by 2060 while its low productivity growth scenario has health costs rising by 7 percent of GDP over the next half century. Most forecasters agree that UK health spending will grow faster than its economy over the next few decades.
An ageing population is not the only reason for rising healthcare costs but the prevailing wisdom is that increased life expectancy will add ever more pressure to stretched health systems over the next couple of decades. As people live longer, they will spend longer needing more healthcare and will become in ever increasing fiscal burden on the shrinking proportion of the population of working age.
But this may not necessarily be so. A recent paper by the Campaign for the NHS Reinstatement Bill argues that the demographic time bomb is a myth.
The extent, speed, and effect of population ageing has been exaggerated by the government because the standard indicator—the old age dependency ratio — does not take account of the fact that people aged over 65 years are younger, fitter and healthier than in previous decades. In fact older people have falling mortality, less morbidity, and are more economically active than before. Some forms of disability are postponed to later years.
Old people ain’t what they used to be. People in their 60s are a lot fitter than they were when the retirement age was set. If we redefine what we mean by working age then the picture doesn’t look nearly as bleak.
Most acute medical care costs occur in the final months of life, with the age at which these occur having little effect. It is not age itself, ‘but the nearness of death’ or health status of
the individual in the ultimate period in the last few years or even months before death that matter most.
Jeroen Spijker and John MacInnes, writing in the British Medical Journal in 2013, showed that if we change our definition of old age from age 65 to less than 15 years of life expectancy, our projected dependency ratios don’t look as bad. As life expectancy crisis above 80, people of 65 are no longer classed as old and so the proportion of the population considered to be dependent and beyond working age does not rise as quickly.
But increasing the working age in line with increases in longevity assumes that, as well as living longer people will stay healthy for longer. The gap between life expectancy (LE) and healthy life expectancy (HLE) also determines how much care people will need at the end of their lives. Unless healthy life expectancy increases at a faster rate than life expectancy, the number of years for which people need care will increase.
Figures released last month by the ONS suggest things are moving in the right direction. Life expectancy is rising for both men and women but healthy life expectancy is rising slightly more so the years of ill health each person can expect has fallen slightly.
Source: ONS
The findings of the Global Burden of Disease Study published in the Lancet yesterday were somewhat different. The good news is that the gap between life expectancy and healthy life expectancy isn’t as wide as that calculated by the ONS. The bad news is that it has been getting wider since the 1990s, as it has been in most countries in the world. People are living longer but living sicker for longer too.
Source: The Lancet
The ONS and Lancet figures are based on different methodologies and I hope that some of the medics and health economists who read this blog will explain the relative merits of each one.
What we do know, though, is that life expectancy is increasing as the world becomes more affluent and all countries are faced with ageing populations. If the improvement in people’s health doesn’t keep pace with increasing life expectancy, then the rapidly changing age profile will present a serious fiscal challenge to all governments. But if we can stay healthier for longer too, the pressure on health spending need not be as severe.
The human race is at the start of a great experiment. For most of our history, only a tiny proportion of people survived beyond their 60s. By the middle of this century, the over 60s will be more than 20 percent of the world’s population. We have no idea what the implications of this will be but we will need to find ways of dealing with such a momentous change. One of them will be to keep ourselves a lot healthier for a lot longer.
Update
The Economist has put some of the data from the Lancet report on a chart. It’s those orange bits that cause the problem.
Flip Chart Fairy Tales 
Thanks Rick, very timely. I work in a public health department in a deprived urban area. We have changed our priority from life expectancy to healthy life expectancy and are just working through what this means in terms of what we need to differently. Our health & wellbeing board has made the same shift. There is no money and there is going to be a lot less, politicians & partners get that increasing healthy life expectancy is the only way we have any chance of controlling costs over the longer term. My job is to convert this into a joint health and wellbeing strategy that sets out a framework for local commissioning up to 2020.
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I recall that the OBR Fiscal Sustainability Report for 2011 assumed 100% morbidity – i.e. every extra year of longevity would be spent in ill-health – which was stupid in the extreme but did the job of justifying media scare stories about the unaffordability of the NHS ahead of the 2012 Health and Social Care Act. Come 2012, the OBR were obliged to back-track, but got their revenge by simply increasing the pessimism of their estimates of NHS productivity growth. Plus ca change.
As you note, we’re living longer because we’re healthier in aggregate. The elderly are not being kept alive on Matrix-style life-support machines at huge expense to the taxpayer. But this focus on OAPs distracts from an arguably more pressing issue, which is chronic morbidity among younger generations. Again, at an aggregate level, we are living healthier lives, but the unit cost of chronic ill-health is increasing because it starts at a younger age (both absolute and relative to longevity).
More traditional ailments, such as lung cancer, pneumoconiosis and heart disease, were exacerbated by environmental factors now in decline, but they also kicked in later in life, exacerbating elderly morbidity. The increase in more “front-loaded” diseases, such as type 2 diabetes, presents a greater fiscal challenge. Andrew Lansley would have saved the NHS a lot of hassle, and earned himself the gratitude of posterity, if his 2012 act had simply mandated a reduction in sugar and salt levels in processed foods.
I wonder with all this hype about an ageing population we will ultimately end in a ‘Logan’s Run’ solution. Problem solved. I do hope the young who are finding cost effective ways of dealing with the ‘old’ realise that one day, sooner than many of them think, that they too will be part of the ‘problem’.
Good point by Dave Timoney – any data on how the increase in health expenditure is balanced between young ppl w chronic disease and ppl with <15yrs of lifeexpectancy. Eg. expense of cancer drug fund? While it's good to consider people working into older age (keeping up 'productivity') – does this displace vacancies that would previous have been available to younger generation – i.e. are young generation becoming relative less productive due to less work & work experience?
We need to understand the complex relationship between older people contributing in non-employed roles, ie formal and informal volunteering (incl caring). And how volunteering contributes to the volunteer's wellbeing (i.e. may decrease social isolation) and possibly reduce morbidity. Basically I'm suggesting if we want to reduce health spend we need massive investment in infrastructure to support volunteering & 'community participation' @nchadborn
I haven’t got time today to go over the Lancet study and compare with the ONS in the depth required. My gut reaction from skimming them is that they are both reasonable. This is not really an arena of perfect analysis/predictions due to the complexity. I’d probably take them as a fan spread and suggest that Dave Timoney is broadly correct – you don’t generally get the increase in LE without a similar increase in HLE – even with all the improvements in medicine and technology, it’s still broadly the case that LE is driven by HLE.
As such things are not as bleak as they have been painted. But there is also a big political challenge, because extra progress will come not from random reorganisation of the NHS. Rather, it has to be about healthy lifestyle encouragements. And few of these are Randian free-market solutions. Rather, it’s back to Scandanavian style social democracy.
Build more sports facilities, make them cheap to use. Pay more coaches for child sports activities – (e.g. either force the EPL to pay for more coaches for kids in general, or tax them to do it). Establish a fund for things that are active, but not sports. Not everyone likes sport. Dance is an area of huge possibility. Gardening works well for older people. I am sure there are many other activities when the question is examined in depth. We should be re-evaluating our transport setups to make self-locomotion more pleasant. (More covered walkways at vital points can make a huge difference!) We also need to address the office setup – my own job for instance basically has me sat at a computer a huge amount. We know that’s not good. Throw in more money for sleep research – it seems that the digital era isn’t helping sleep and that in turn isn’t helping health.
None of this is rocket science – and other countries manage to do some of it, so our Osbornian desire to fail on every front needs to be seen for the short-term thinking that it is…
The answers to the problems of healthy ageing are a lot less obvious than most seem to think especially when thinking about the impact on the cost of the NHS.
It is true that historically the NHS and others have focussed on extending life when they should probably have focussed on extending healthy life. Extending misery is not a particularly noble goal.
But there are several reasons why the connection between an ageing population and the NHS budget could be made less severe without changing the core demographics or making people healthier (though we should strive to do that anyway).
One of the biggest problems in the NHS is an inability to distinguish between what treatments work and what treatments are entirely futile. A disturbing amount of routine treatment does’t clearly lead to notable improvements in the patient’s wellbeing (though we struggle to even bother to measure this though the introduction of PROMS for some procedures is helping). This is particularly true towards the end of a patient’t life when the medical tendency is to spend a lot of futile effort trying to keep the patient alive. This is often contrary to the express wishes of the patient (most of whom want to die at home surrounded by family or friends, not in a hospital surrounded by machines that go ping).
Expensive and marginally beneficial cancer treatments, for example, are greatly overused. The well-informed might often choose palliative care rather than futile intervention (and may actually live longer as a result according to the statistics). In the US surveys show that doctors diagnosed with terminal cancers leave hospital never to return because, being informed about the consequences, they choose a peaceful death rather than brutal interventions. Their patients. though, are often advised to spend as much money as possible even if that makes their final years a misery.
The extreme case of end of life care illustrates a more general point. The NHS does not have a good solution to many of our illnesses. Just because we are sick doesn’t mean the NHS can help. We would do a much better job by being far more discriminating when choosing what treatments we will fund. And being more discriminating breaks the link between the budget and the ageing population.
You always have enough money.
This is always a real resources problem, in other words, what share of output the elderly get.
And you maximize that by getting high capacity utilization now.
I do wish people would realise that you can’t actually save up for pensions. You can’t put bread away for 40 years.
Pensions are a current production issue. All Pensions simply take the pension savings of current workers (a good deal of which are now compulsory) add in the government bung from Gilts and any dividends, then hand that out to pensioners.
It’s a simple private tax collection arrangement.
Public sector pensions are the same. Government hands out money to pensioners who spend it. The taxes that generates plus the savings of those that choose not to spend cover it. Taxation is set to make space for those pensioners.
Capitalisation of pension liabilities is utterly irrelevant to an entity that issues money. It cannot run out!
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