The Graying of NH's Health Care

Health care spending in NH has outpaced growth in the economy for decades and is projected to continue doing so into the future. This has caused no small amount of consternation for legislators trying to balance state budgets and business owners trying to manage their bottom lines. Prices and utilization are two obvious drivers of health care cost growth. Put simply, health care is getting more expensive, and people-especially older people-are receiving more care, more often.

The aging of the Granite State will play a major role in shaping health care spending well into the future. In a recent project supported by the Endowment For Health, the New Hampshire Center for Public Policy Studies explored that trend and made the following findings: 

NH is Aging-Slowly

If the general trends in migration and births and deaths during the past 10 years continue at a similar pace, NH is projected to face a silver tsunami-meaning a higher median age and more residents over age 65.

The good news is that the rate of aging will not peak until 2020, giving policymakers, businesses and health care providers the time to prepare for what is coming. That said, aging patterns won't be uniform. Northern communities will age more quickly than southern ones, and some areas will feel the pressure to adapt to an older demographic sooner than others.

Health Care Usage Will Rise

While obvious, it is worth stating that as a person ages, he or she tends to have more and different health care needs. Within the commercial market, those between the ages of 45 and 64 use more than three times the health care resources than those through age 18. Within the Medicaid market, individuals over the age of 85 use 10 times as much health care as children under 5. In both cases, these greater expenditures are a result of the volume and type of services being consumed.

Rising Private Insurance Premiums

Health care premiums have been growing quickly in NH, and an aging population will speed that growth for two reasons. First, older individuals in the commercial market need more health care and the services they need cost more. As the share of the population in the 45-to-64-year-old age bracket increases in the commercial market, actuarial risk will increase and premiums could potentially increase. Second, as the market share of Medicare users increases, hospitals and other providers will continue to shift the financial losses associated with Medicare to the private market-likely resulting in higher premiums.

Aging to Impact State Budget

The state acts as a purchaser of health care in several ways. The state buys insurance for its employees, provides health care for its prisoners, and covers insurance costs for its retired state workers. As those within these programs age, and demand for services increases, those programs will become more expensive. One example: the state's corrections systems counted 105 prisoners over the age of 65 last year. It's estimated that number will be 269 by 2030.

More Health, Less Health Care

How should legislators and others think about the future of health policy in NH? First, keep people healthy. The healthier the population, the less it costs to care for it. Public health activities tend to focus on the young and the old. But we need to ask how we can better the health of those in the middle.

Second, educate the community-including nonprofit hospital boards-about the state's aging dynamic and the long-term incentives that are created by the graying population. Finally, find ways of encouraging health systems to provide fewer services or provide existing services cheaper. On this point, there is no easy answer. Regulatory approaches to encouraging lower aggregate health care costs have not been successful for both political and policy reasons.   

More health care is not necessarily better health care. Research has found that for patients with chronic illnesses, more aggressive interventions actually shorten life expectancy, probably because of the risks associated with hospitalization. A recent study reported that almost three-quarters of Americans say they have declined interventions that were recommended by their physicians because they thought that it was unnecessary or the benefits did not outweigh the risks.

Making patients aware of the trade-offs associated with treatment choices is one way of reducing demand. Paying physicians to spend more time advising patients about treatment alternatives without penalizing them for doing less is another important strategy for reducing utilization. n

Steve Norton is executive director of the New Hampshire Center for Public Policy Studies, an independent, nonprofit, non-partisan organization that pursues data-driven research on public policy. Its work includes research on the state budget, public school funding and health care finance. Norton may be reached at snorton at nhpolicy.org.