Health and Population Aging: A Multinational Comparison Gerard F. Anderson, Ph.D. Peter S. Hussey Johns Hopkins Universi

1. Health and Population Aging:A Multinational ComparisonGerard F. Anderson, Ph.D.Peter S. HusseyJohns Hopkins UniversityOctober 1999

2. Acknowledgements Thanks to Stephane Jacobzone and the OECD for providing data and expert assistance with their interpretation and presentation. Thanks to Karen Davis, Robin Osborn, Cathy Schoen, and Susan Raetzman at The Commonwealth Fund, and to Edward Aiston, François Béland, John C. Campbell, John Drabek, Robert Eckhardt, Howard Glennerster, Mary Harahan, Anna Howe, William Marton, Lester Mundell, Karen Poutasi, Nora Ritchie, Evelyn Shapiro, Clive Smee, and Joshua Wiener for reviewing and commenting on a draft. ii

3. Contents iii

4. iv

5. I. Overview

6. Preparing for an Aging Population 2

7. 3

8. 4

9. II. Demographics

10. Chart II-1 From 2000 to 2020, the percentage of the population age 65 and older will increase most rapidly in Japan. • In 2000, Japan will have a higher percentage of the population age 65 and older than the United States, Australia, or New Zealand will have in 2020. • In 2020, 1 of 4 Japanese, 1 of 5 Germans, French, and British, and 1 of 6 Americans, Canadians, Australians, and New Zealanders will be age 65 or older. • The increase will be slower in Germany, France, and the United Kingdom than elsewhere. Percentage of the Population Age 65 and Older, 2000–2020 Source: United Nations 6

11. Chart II-1 From 2000 to 2020, the percentage of the population age 65 and older will increase. Japan Germany France United Kingdom Canada Australia United States New Zealand Source: United Nations 7

12. Chart II-2 From 2000 to 2020, the United States will have the slowest growth in the percentage of the population age 80 and older.11 • Japan and Germany will have the most rapid growth. Growth of the Percentage of the Population Age 80 and Older, 2000–2020 • Germany, the United Kingdom, France, and Japan already have a high percentage of the population age 80 and older. Year When 4 Percent of the Population Is Age 80 and Older Source:United Nations 8

13. Chart II-2 From 2000 to 2020, the percentage of the population age 80 and older will increase. Japan Germany France United Kingdom Canada United States Australia New Zealand Source: United Nations 9

14. Chart II-3 Life expectancy at age 65 increased by three to seven years from 1960 to 1996. • Japan had the most rapid increases in life expectancy at age 65; the United States had among the slowest. • Increases in life expectancy at age 65 were greater for women than men. • The United Nations hypothesizes that the rate of increase in life expectancy will be slower from 2000 to 2020 than from 1960 to 2000.1 Change in Life Expectancy for Females at Age 65, 1960–1996 Change in Life Expectancy for Males at Age 65, 1960–1996 a1961 b1963 Source: OECD 10

15. Chart II-3 At age 65, people live, on average, another 15 to 22 years. Source: OECD 11

16. Chart II-4 Life expectancy at age 80 increased by one to four years from 1960 to 1996. • Japan had the most rapid increases in life expectancy at age 80; the United States had the slowest. • Increases in life expectancy at age 80 were greater for women than men. Change in Life Expectancy for Females at Age 80, 1960–1996 Change in Life Expectancy for Males at Age 80, 1960–1996 a1961 b1963 Source: OECD 12

17. Chart II-4 At age 80, people live, on average, another 7 to 10 years. Source: OECD 13

18. Chart II-5 Nearly twice as many women as men live to age 80. • Approximately 9 men for every 10 women live to age 65. • Approximately 8.5 men for every 10 women live to age 70. • Approximately 7.5 men for every 10 women live to age 75. • Life expectancy for women averages 6 years longer than for men. • From 2000 to 2020, the difference in life expectancy between men and women is projected to shrink in Australia, Canada, France, Germany, New Zealand, and the United States, and remains the same in Japan and the United Kingdom. Projected Life Expectancy in 2000 and 2020 Source: United Nations 14

19. Chart II-5 The ratio of men to women declines rapidly in older population groups. Age Group 65–69 70–74 75–79 80+ Source: OECD 15

21. III. Health Care Costs

22. Chart III-1 Most countries spend three to five times more on people age 65 and older than on people younger than age 65. • Japan has the highest ratio—4.8. • The United States’ ratio is near the middle—3.8. • Germany has the lowest ratio—2.7.3 Average Health Expenditures per Capita, Ratio Age 65+/Age 0–64 Source: OECD 18

23. Chart III-1 In 1997, average health expenditures per capita for people age 65 and older were highest in the United States.2,3 Source: OECD 19

24. Chart III-2 International differences in population age groups do not account for variations in health spending. • The United States spent the greatest percentage of GDP on health in 1997, but had the second smallest percentage of the population age 65 and older. • Japan had the greatest percentage of the population age 65 and older in 1997, but spent the second smallest percentage of GDP on health. • Countries were estimated to spend from 2.5 percent to 5 percent of GDP on health for their populations age 65 and older in 1997. • The correlation between the percentage of the population age 65 and older and the percentage of GDP spent on health for elderly people is -0.07, which is not statistically significant. Proportion of Total Health Expenditures for People Age 65 and Older, 1997 Source: OECD 20

25. Chart III-2 One-third to one-half of health spending is for elderly people.4 Source: OECD 21

27. IV. Long-Term Care

28. Chart IV-1 Public institutional long-term care spending exceeds public formal home care spending. Public Long-Term Care Spending by Category, Percentage of GDP Source: OECD 24

29. Chart IV-1 One of 15 to 1 of 20 people age 65 or older are institutionalized.5,13 Source: OECD 25

30. Chart IV-2 Japan has the highest rate of parents living with their grown children and the smallest percentage of elderly people living alone. Percentage of the Population Age 65 and Older Living with Their Grown Children • The percentage of the population age 65 and older living with their grown children is highest in Japan. In the rest of the countries, the percentage ranges from 12 percent to 17 percent. • The percentage of elderly people living alone increased in all countries from 1970 to 1990. Percentage of the Population Age 65 and Older Living Alone, 1970–199014 Source: OECD 26

31. Chart IV-2 In 1995, Canada and the United States provided the greatest access to formal home care for people age 65 and older.6,15 Source: OECD 27

33. V. Retirement

34. Chart V-1 The ratio of potential workers to children and seniors plateaus in most countries from 1990 to 2010. • After 2010, the ratio of potential workers to children and seniors begins to decline. • The ratio of potential workers to children and seniors is the inverse of the “total dependency ratio,” a measure of the supportive capacity of a population. Ratio of People Ages 15–64 to People Age 14 and Younger and 65 and Older, 1960–2020 Source: United Nations 30

35. Chart V-1 The number of working-age people for every elderly person has declined steadily since 1960, and is projected to continue to decline through 2020. New Zealand United States Australia Canada United Kingdom France Germany Japan Source: United Nations 31

36. Chart V-2 The average age of retirement declined in all eight countries from 1960 to 1995. • Women retire earlier than men in all countries. • For men in 1995, France had the earliest average age of retirement, Japan the latest. • For women in 1995, Australia had the earliest average age of retirement, Japan the latest. • From 1960 to 1995, France had the most rapid decline in retirement age, Japan the least. Average Age of Retirement, 1960 and 1995 Source: OECD 32

37. Chart V-2 The average age of retirement ranged from 57 to 67 years in 1995, and women retired earlier than men. Source: OECD 33

38. Chart V-3 Labor forces are projected to become significantly older by 2030.7 • From 1970 to 1995, labor force participation by those age 60 and older declined in all countries except Japan. • Current retirement projections are that by 2030, more than 1 of 5 Japanese workers will be age 60 or older. In the United States, 1 of 10 workers will be age 60 or older. Labor Force Participation Rates, Age 60 and Older, 1970–2030 Source: OECD 34

39. Chart V-3 A relatively small proportion of the labor force was age 60 and older in 1995. Source: OECD 35

41. VI. Income of the Elderly

42. Chart VI-1 A greater percentage of people age 67 in the United States and United Kingdom receive private income support than in other countries.9 • Singles are less likely to receive private income support than couples. Percentage of Households Receiving Private Income Support at Age 67 • People with high incomes are more likely to receive private income support. Percentage of Households Receiving Private Income Support at Age 67, by Income Quintile Source: OECD 38

43. Chart VI-1 At age 67, incomes drop to an average of 70 percent to 80 percent of what they were at age 55.8,17 Source: OECD 39

44. Chart VI-2 The age of entitlement for public old-age pensions ranges from 60 to 65. • In some countries, women are eligible for pensions earlier than men. Standard Age of Entitlement to Full Public Old-Age Pensions, 1997 Source: OECD 40

45. Chart VI-2 Public old-age pension expenditures ranged from 3 percent to 8 percent of GDP in 1995.10 Source: OECD 41

47. VII. Public Policy

48. Chart VII-1 All countries except the United States offer universal pharmaceutical insurance coverage for the elderly. • In the United States, the Medicare program does not cover pharmaceuticals. Instead, public coverage is obtained from the Medicaid program. In addition, most Medicare managed care plans offer pharmaceutical coverage. Some Medicare beneficiaries receive private pharmaceutical coverage through employer-based retiree health benefits or through privately purchased Medigap policies. • In Germany, universal public pharmaceutical coverage is offered, but some people above a certain income threshold opt for private health insurance coverage. These plans have pharmaceutical coverage. • In Canada, slightly fewer than 100 percent of elderly people have access to prescription drug coverage. Under the Canada Health Act, provincial and territorial health plans are required to fully cover all medically necessary drugs administered in the hospital without charging patients; however, the Act does not require plans to cover drugs prescribed outside of hospitals or in nursing homes. In most provinces and territories, seniors are enrolled in government-sponsored drug plans for outpatient drug coverage. The majority of these drug plans have client cost-shared components dependent upon income. • In some countries, pharmaceutical coverage is more restrictive than in others. For example, Australia uses cost-effectiveness to determine which pharmaceuticals are covered publicly. 44

49. Chart VII-1 In the United States, far fewer elderly people had insurance coverage for pharmaceuticals than in the other seven countries in 1995. Source: OECD 45

50. Chart VII-2 In most countries, the majority of spending for long-term care is from public sources. Percentage of GDP Spent on Long-Term Care18 Source: OECD 46