apocalyptic demography

Many people fear that population ageing will cause health care costs to skyrocket. Numerous studies have debunked this as a myth. (See, for example, here and here and here and here.) Yet the belief persists. Why? Some years ago a group of researchers in British Columbia, in the conclusion of a report of their study of the effects of ageing on the demand for health care, examined the myth’s continuing appeal, in a section titled “What Keeps the Zombie Walking?”.

Apocalyptic demography, or more generally the claim that attempting to meet the health care needs of an aging population will bankrupt modern societies, or make universal health care systems unsustainable, is a “zombie”, an idea or allegation that is intellectually dead but can never permanently be put to rest. ….

Zombies appear to derive their vitality from two characteristics. First, they have a superficial plausibility …. It is true that older people use more health care, sometimes a lot more, than younger people, and it is true that the proportion of older people in all modern populations is increasing. So why should this not lead to large increases in health care use and costs? But more important, the zombie … serves the interests of some identifiable interest group. ….

If relentless demographic trends make universal public health care systems “unsustainable” – then they cannot be sustained. Their collapse is inevitable. What will replace them? Private or mixed public/private financing systems in which those with more resources get more care, and those with less get less. ….

The preference of the healthy and particularly of the wealthy for private financing of health care is readily understandable. Public systems require people to contribute more or less according to their income levels, regardless of their needs, and provide care according to needs, not according to income level. So the healthy and wealthy pay for more than they get, and the unhealthy and unwealthy get more than they pay for. To the extent that financing is privatized, those with more resources do not have to pay for care for those with less, and if they need care, they can buy themselves a (perceived) higher standard of care again without having to pay for a similar standard for others.

R.G.Evans et al., “Apocalypse No: Population Aging and the Future of Health Care Systems”, Canadian Journal of Aging 20 (Supplement 1, 2001), pp. 160–191.

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  1. […] Ah! Housing prices from 2000 through 2006 did not follow a random walk. Red flags indicated a bubble, and probable collapse of inflated prices. These facts are not consistent with the theory. Similar evidence could be cited for other periods and for other assets, including stocks. I conclude that the Efficient Market Hypothesis (EMH) is a ‘zombie’, “an idea or allegation that is intellectually dead but can never permanently be put to rest&#8…. […]