presentation: prospects of runaway health care cost in the graying emerging economies of asia

8/12/2019 PRESENTATION: Prospects of runaway health care cost in the graying emerging economies of Asia

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Indu Bhushan, Patricia Moser and Vivian Francisco

Hic Sunt Dracones (Here

are dragons): Prospects ofrunaway health care cost inthe graying emerging

economies of Asia

Disclaimer: The views expressed in this paper/presentation are the views of the author and do notnecessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board ofGovernors, or the governments they represent. ADB does not guarantee the accuracy of the dataincluded in this paper and accepts no responsibility for any consequence of their use. Terminologyused may not necessarily be consistent with ADB official terms.


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Economic and

DemographicInformation, 2012

Peoples

Republic ofChina

Indonesia

Viet Nam

Population (million) 1,351 247 89

Population , >65 (%) 8.7 5.1 6.6

Old-age Dependency Ratio

(% of working-agepopulation)

11.8 7.8 9.3

GDP per capita (constant2005 US$)

3,348 1,732 986

Health expenditure per

capita, PPP (constant 2005international $, 2012)

480 150 233

Background

Source: UN, Department of Economic and Social Affairs. World Population Prospects: The 2012 Revisionhttp://esa.un.org/wpp/Excel-Data/population.htm(accessed 4 April 2014) and World Bank, World DevelopmentIndicators online database http://data.worldbank.org/data-catalog/world-development-indicators (Accessed 30 May2014).
http://esa.un.org/wpp/Excel-Data/population.htmhttp://esa.un.org/wpp/Excel-Data/population.htmhttp://esa.un.org/wpp/Excel-Data/population.htmhttp://esa.un.org/wpp/Excel-Data/population.htm


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Demographic Shifts

0

20

40

60

80

100

120

140

160

0

-4

5

-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100

+

InMillions

Age Group

PRC

2010

2030

2050

0

5

10

15

20

25

30

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

InMillions

Age Group

Indonesia

2010

2030

20500

1

2

3

4

5

6

7

8

9

10

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

10

0+

InMillions

Age Group

Viet Nam

2010

2030

2050

Total population by five-year agegroup (million)

Source: UN, Department of Economic and Social Affairs.World Population Prospects: The 2012 Revisionhttp://esa.un.org/wpp/Excel-Data/population.htm(accessed 4 April 2014)


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Demographic Shifts

0

50

100

150

200

250

300

350

PRC Indonesia Viet Nam

InMillion

s 2010

2030

2050

Total population, 65 years and over (million, percent)

Source: UN, Department of Economic and Social Affairs. World Population Prospects: The 2012 Revisionhttp://esa.un.org/wpp/Excel-Data/population.htm(accessed 4 April 2014)

0

5

10

15

20

25

30

PRC Indonesia Viet Nam

InPercen

t

2010

2030

2050


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PRC

Indonesia

Viet Nam

USA

0

5

10

15

20

25

30

35

40

2010 2015 2020 2025 2030 2035 2040

Percent

Demographic Shifts

Source: UN, Department of Economic and Social Affairs. World Population Prospects: The 2012 Revisionhttp://esa.un.org/wpp/Excel-Data/population.htm(accessed 1 July 2014).

Old-age dependency ratio (ratio of population aged 65+ per 100 population 15-64)


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Speed of Population Aging

Share in total population (percent)

The shares of elderly population rose more steeply in PRC and Indonesia than in Viet Nam where rapid

increase happened instead in the 15-64 age group in 1995-2012. The share of elderly population in Viet Nam

will begin to climb and at rate faster than in two other countries only in years after 2015.

0

5

10

15

20

25

30

35

1995

1997

1999

2001

2003

2005

2007

2009

2011

2015

2025

2035

2045

2055

2065

2075

2085

2095

Model Forecast

Pe

rcent

65 years and over

Viet Nam PRC Indonesia

0

10

20

30

40

50

60

70

80

1995

1997

1999

2001

2003

2005

2007

2009

2011

2015

2025

2035

2045

2055

2065

2075

2085

2095

Model Forecast

Percent

15-64 years

Viet Nam PRC Indonesia

Source: UN, Department of Economic and Social Affairs. World Population Prospects: The 2012 Revisionhttp://esa.un.org/wpp/Excel-Data/population.htm(accessed 4 April 2014)


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Speed of Population Aging

7

8

9

10

11

12

13

14

1860 1880 1900 1920 1940 1960 1980 2000 2020 2040

Percentofpopulationa

ged65+

Time required or expected for percentage of population aged 65 and over to rise from 7 to14 percent

The proportion of elderly people is rising faster in developing countries

than in the developed world.

Source: Adapted from Kinsella K. He W. An Aging World: 2008. Washington DC: National Institute on Aging and U.S.

Census Bureau, 2009.


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Determinants of Health Care Cost

Income

Morbidity levels

Technology Other factors (including

health system coverage andefficiency)


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Health Care Costs

Health expenditure per capita, PPP (constant 2005 international $)

health care expenditures has risen significantly in recent years

Source: World Bank, World Development Indicators online database http://data.worldbank.org/data-catalog/world-

development-indicators (Accessed 30 May 2014)

PRC

Indonesia

Viet Nam

0

100

200

300

400

500

600

1995 1997 1999 2001 2003 2005 2007 2009 2011

2005interna

tional$


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Effects of Aging and Population Growth onHealth Expenditure

MODEL Health expenditure per capita= f (GDP per capita, % ofpopulation 65 and over)

Country InterceptGDP per

capita

% of

popn 65

and over

R2 N

PRC -6.5717 0.6718 3.3591 0.9945 18

t-stat -17.2381 3.1092 3.5160

Indonesia -12.8105 1.7461 2.9778 0.9580 18

t-stat

-12.9965

9.0666

5.8503

Viet Nam -6.3863 2.1172 -1.4211 0.9861 18

t-stat

-6.2581

21.8896

-1.8121

Notes: N refers to number of time series observations from 1995 to 2012when data for health expenditure per capita is available. Regressioncoefficients and t-values in gray are insignificant.

Health expenditure per capita tendsto increase with GDP per capita andpopulation aging in PRC andIndonesia

Health spending in Viet Nam,however, is influenced only byincome. The share of elderlypopulation in Viet Nam is relativelystable during the period whenregression was done. In contrast,those for PRC and Indonesia havebeen rising more steeply.

Population aging measured by % ofpopulation aged 65 and over hashigher impact on health spendingthan GDP per capita.

Original estimates


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Effects of Aging and Population Growth onHealth Expenditure

MODEL Health expenditure per capita= f (GDP per capita, % ofpopulation 65 and over)

Country InterceptGDP per

capita

% of

popn 65

and over

R2 N

PRC -6.5717 0.6718 3.3591 0.9945 18

t-stat -17.2381 3.1092 3.5160

Indonesia -12.8105 1.7461 2.9778 0.9580 18

t-stat

-12.9965

9.0666

5.8503

Viet Nam -8.1110 1.9754 0.9841 18

t-stat

-20.6084 32.4840

Notes: N refers to number of time series observations from 1995 to 2012when data for health expenditure per capita is available.

Health expenditure per capita tendsto increase with GDP per capita andpopulation aging in PRC andIndonesia

Health spending in Viet Nam,however, is influenced only byincome. The share of elderlypopulation in Viet Nam is relativelystable during the period whenregression was done. In contrast,those for PRC and Indonesia havebeen rising more steeply.

Population aging measured by % ofpopulation aged 65 and over hashigher impact on health spendingthan GDP per capita.

Preferred solution: Viet Nam model excludes elderlypopulation.


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Health care cost in 2030

Viet Nam estimates excludes elderly population.

PRC, 6780

Indonesia, 5828

Viet Nam, 3071

0

1000

2000

3000

4000

5000

6000

7000

8000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Health

expend

iture

percapita,

PPP

(2005in

ternational$)


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Health expenditure, total (% of GDP)

0

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2030

Percent

PRC

Indonesia

Viet Nam


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No research to support this hypothesis in thesecountries: we are in uncharted territories

However, two factors might need to be considered

Increase in elderly population outweighs anypotential morbidity compression

Morbidity compression might not happen inemerging economies, since todays elderly

population experienced

poor nutrition in their childhood

environmental insult during adulthood

Will Morbidity Compression Attenuate theIncrease in Health Costs?


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The three Asian Countries are likely to see largeincrease in their health care costs, which canbecome unaffordable

Population aging will be one key factor in thisincrease

Much more research is needed to understand thelikely impact of aging process on health care costs

New models of health care costs need to bedeveloped

Need to start working on this issue NOW

CONCLUSION

presentation: prospects of runaway health care cost in the graying emerging economies of asia

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