Australia’s ageing population is not the main cause of higher health funding costs, a Council of the Ageing forum has heard. Photograph: John Birdsall/www.JohnBirdsall.co.uk
The ageing population will not cause a collapse of the healthcare system because it is not the primary cause of increased health costs, the Grattan Institute’s Stephen Duckett has said.
Duckett warned against panic over sustainability of the system, despite accepting it was an “issue of concern”, with health costs to rise from 9% of GDP to 12.5% in the next 20 years.
The former health and human services department secretary made the comments at a Council of the Ageing forum on primary healthcare for older Australians in Canberra on Thursday.
The ageing of the population was outweighed as a cause of rising health costs by changing patterns of care, including increased visits and higher quality services, Duckett said.
“People at age 85 are getting different treatment now than an 85-year-old did 10 years ago.”
Duckett said the Grattan Institute had analysed the cause of increased spending on health and found “the pure ageing component is relatively small”.
Between 2004 and 2014, the increase in the number of people aged 70 and over accounted for 18% of the increase in hospital admissions, he said. That was dwarfed as a cause by population growth of those under 70 (which accounted for 35%), change in treatment patterns for people under 70 (26%), and change in treatment patterns for those over 70 (22%).
“Increase in expenditure is blamed on ageing and it’s just not true,” Duckett said.
“When they say ageing is the cause of these health cost increases – they are either numerically challenged or benefit from self-education.”
Duckett warned against the “Henny Penny approach to sustainability of the healthcare system – people saying the sky is falling in”.
“It forces you down the path of thinking you need to do something dramatic and do it soon.”
The Abbott government cut $57bn from hospitals over 10 years in the 2014 budget and extended the Medicare rebate freeze until 2020 in the 2016 budget.
The Turnbull government restored $2.9bn to hospitals, after warnings from the states they faced serious revenue problems in paying for health.
In its 2016 election campaign Labor promised to restore $2bn more to hospitals than the Coalition and to spend $12.2bn reversing the Medicare rebate freeze.
Speaking in the same session as Duckett, the research director of the Association of Superannuation Funds of Australia, Ross Clare, in part blamed intergenerational reports produced by Treasury for alarmism about health spending and debt levels.
“The intergenerational reports are more of a propaganda device than a serious public policy analysis most years,” he said. “A range of them in recent years have had quite peculiar themes that have been selected for whatever Treasury or their masters want them to do.
“The last one had a lot about the impending debt crisis and quite far-fetched projections … but we seem to have moved on from that.”
Gannon said the discussion had focused on the fact health was not the problem with the budget and should not be targeted in further attempts at budget repair.
Duckett said it was inevitable the number of elderly people would increase, but far from being a “grey tsunami” it was a “grey glacier”.
“It is slow: we have time to do something about it, and redesign the system.”
Duckett said warnings that focused only on costs overlooked the fact that people might be receiving higher quality care.
Deaths attributable to healthcare failings fell from 200 per 100,000 in 1987 to about 80 in 2007.
“And if you ask people how well they feel, people who report having poor or only fair health is going down, so we are feeling better,” Duckett said.
He said it was not clear whether the improved outcomes were worth the increased spending, but argued “it is improper to look at the cost side without looking at the benefit side”.