Health driving an unhealthy generational wedge
The demand for healthcare will increase massively over the coming decades. There are two big drivers: an increasingly unhealthy population and an ageing population.
minster or policy wonks? There is no visible leadership now, but without public discussion and agreement, it will get ugly.
Much of New Zealand’s health spending is public, because New Zealand has a universal access healthcare system. Public health spend is roughly $16 billion, compared with total government spending of about $90b.
Private spending is much smaller, at about $2.5b in 2013. But private spending on health is increasing – partly because the public sector is constrained and those who can afford private care (particularly for elective procedures) can bypass waiting lists in the public system.
Unsurprisingly, much of the private health spending is by older and richer households, because they can afford to and are more likely to have private health insurance. Only about a third of New Zealanders have private health insurance. Access to healthcare is likely to become more unequal over time.
The demand for healthcare will increase massively over the coming decades. There are two big drivers: an increasingly unhealthy population and an ageing population.
Our population is increasingly overweight and obese. This is likely to increase non-communicable diseases such as diabetes and heartrelated issues. Some of the unhealthiness also comes from our old, cold and mouldy homes – which lead to preventable diseases like rheumatic fever at shocking rates for a developed country.
These forces are likely to add to health demand for the foreseeable future. We typically need health care early and late in life.
Commensurately, health spending is concentrated among the young and very old. Roughly, the health spending in the first 80-odd years of life is less than the end of life spending.
As our population gets older, and the very old segment of the population grows, there will be serious increases in health spending. This will lead to challenging conversations for our policy choices, fiscal choices and medical choices.
The broad policy choice we have to make is how to prioritise health spending that is prevention versus treatment.
Because treatment is measurable and need to be done, it tends to receive priority over prevention programmes.
Recent increases in noncommunicable and preventable diseases in New Zealand suggests we need to rethink this.
As the older population grows and the tax-paying working population will shrink in relative terms. That is, there will be fewer workers to pay for the spending on many retired. Not only will the total pool of taxes be under pressure, more of the spending will be on older people.
There will be a political and fiscal reckoning, as those workers will be unwilling to pay evergreater taxes for older folk who did not prepare for the well-known expected increases in age-related spending.
Alongside other exclusions for Generation X and Millennials from home ownership and secure work, fiscal pressures will add to the building tensions for generational warfare – unless the tax system is made fairer, by taxing evenhandedly incomes from work and wealth. Taxing wealth will become more important because the older wealthy folk nearing retirement deliberately chose not to prepare for known ageing-related costs.
For medicine, it is a massive moral dilemma. How to decide when to give treatment? Will the treatment extend life or merely extend death? How does the Hippocratic oath sit with access to care and rationing it depending on the patient’s age?
Health costs will drive an unhealthy wedge between generations. A long and drawn-out political, fiscal and ethical reckoning is looming.
We as a nation should choose to find solutions now, rather than the usual can-kick we do with difficult public policies. Like anything, what we need is some leadership to get this process started.
Shamubeel Eaqub is an independent economist and consultant. Follow him on Twitter: @Seaqub.