In the first of a five-part series examining the impact of the ageing of Bermuda’s population, we look at the healthcare sector.

A shift in population demographics over the next seven years is expected to have a dramatic impact on the provision and cost of healthcare in Bermuda.

Government expenditure on healthcare is already the largest area of spending in the budget, exceeding debt interest. The rising cost of healthcare is a serious burden for businesses, which are legally bound to provide healthcare coverage for their employees, while also being a drain on household income.

According to a recent report, the current situation will worsen as the island’s population ages, resulting in increased demand for healthcare services, and a corresponding upward pressure on costs, at a time when Bermuda’s health system share of gross domestic product — 11.5 per cent — is already the third highest among Organisation for Economic Co-operation and Development countries.

Only the US and Switzerland outstrip Bermuda in that regard.

The island’s shifting population demographics, as outlined in Bermuda’s Population Projections, 2016-2026, means that, based on current projections, the proportion of the population 65 or older will rise from 16.9 per cent in 2016, to 24.9 per cent in 2026. This will occur as life expectancy increases and large groups born during past periods of high fertility become older. The overall population will decline by 111 people by 2026 as the number of deaths exceed births.

The increase in the number of retirees will be mirrored by a corresponding decrease in the number of people in the workforce paying into the system.

According to the United Nations, a country in which more than 7 per cent of its population is over 65 is considered “aged”; Bermuda reached that milestone in 1980. By 2026, one in nine of us will be 75 or older, increasing demand for long-term care. The median age will be 49.

The old-age dependency ratio, which measures the ratio of the population 65 years and over to the working-age population (15-64), is expected to soar from 24.7 to 39.9 by 2026. This means that there are expected to be 40 seniors for every 100 people of working age. The ratio is used as a gauge of a society’s capacity to maintain the quality of life of its seniors.

Citing 2010 census data, the report says that 77 per cent of seniors had a long-term health condition compared with 35 per cent of persons under 65. Moreover, 14 per cent of seniors had a disabling long-term health condition in comparison to 4 per cent of the population under 65. Overall, 40 per cent of the population reported having a long-term health condition in 2010 compared to 18 per cent in 2000.

The island’s Fiscal Responsibility Panel said in a recent report that our ageing population will result in increased demand for more or larger retirement facilities, senior citizen daycare programmes and in-home care services. It agreed with the population projection report’s findings that purpose-built residential facilities with trained staff for very elderly residents with chronic health challenges would be required in future.

John Wight, chief executive officer of BF&M Ltd, a health insurer, said it was important that the island develop new healthcare facilities.

“One important aspect of the current healthcare model which needs to be understood and addressed relates to the setting where many residents receive their care,” Mr Wight said. “In the early 1970s, the Hospitals Act came into force at a time when it made sense to drive people to the hospital for medical treatment. In 2019, we have to re-examine that approach and work on a new model of treating residents in the most efficient and cost effective manner, which often is not the hospital. We need to have a healthcare system that is flexible, where there are facilities other than the hospital to care for our aged population. Our lack of facilities is a critical issue both financially and emotionally for families as their loved ones grow older.”

Mr Wight’s colleague at BF&M, Michelle Jackson, agreed. “A lot of families have a loved one at the hospital because there aren’t very many options if you don’t have the finances,” said Mrs Jackson, senior vice-president, group lines, health and life, at BF&M.

“Long-term care is a huge issue in Bermuda. The hospital can’t be the place where people seek long-term care, it’s not ideal. Generally, we want to get out of the hospital as soon as possible. It is not the best place for people to age well.”

The panel also pointed to rising demand for medical services from the more elderly segments of the labour force (over age 50) with annual per capita claim costs for outpatient services rising by more than 50 per cent in 2017.

“[That rise] contributed to a 6.4 per cent increase in the Standard Premium Rate in 2018-19 and even larger increases in the premiums charged for supplemental private insurance schemes. The premiums paid by the Government on its much more comprehensive health insurance plan — the GEHI — may have to rise at a much faster rate than the SPR, most likely between 12.5 and 15 per cent.”

The panel said it warned in its 2017 report that over the medium and long term, the cost of healthcare must be addressed. “The island’s costly healthcare system risks overwhelming the budget and the whole economy as the population becomes increasingly elderly and frailer, with more and more requiring long-term care,” the panel wrote. “We said it would be important to pursue with determination measures to control and reduce costs and to better target government subsidies to those most in need.”

In its more recent report, the panel said measures must include:

• Encouraging elderly residents with chronic diseases to use more cost-effective prevention and treatment within the community rather than make costly hospital visits.

• Devising a more effective approach to the treatment of some chronic diseases, pointing to the rising incidence of kidney disease on the island and the $20 million annual cost of dialysis treatment for the less than 200 people in Bermuda requiring such treatment.

• Developing for all of us — seniors included — greater on-island treatment of certain categories of inpatient care in order to reduce expensive overseas trips for treatment as well as partnering with insurers and designated overseas hospital centres for the treatment of Bermuda residents. “We are encouraged by the recent partnering agreements with the Johns Hopkins University for on-island treatment and the work of the Health Insurance Department to explore opportunities for care in low-cost settings with good health outcomes,” the panel wrote.

• Making health insurance mandatory, and revisiting Government’s annual block grant of $30 million that is used to subsidise healthcare for children, the indigent and the elderly in order to redirect subsidies for those who do not have healthcare covered by employers — and, using means testing, allocating premium subsidies for anyone who meets set criteria related to income and health status (irrespective of age). This, the panel says, would also result in a fairer and more satisfactory outcome for the health condition of all Bermudians.

• Broadening the coverage of the standard health benefit to include prescription medications, preventive care, and access to providers that offer effective disease management (rather than being limited only to hospital care).

The panel said it was encouraged by Government’s efforts to begin to address some of the sources of chronic disease in Bermuda. “Witness the Bermuda Health Strategy, the Bermuda Health Action Plan, the Long-Term Care Action Plan, and a number of initiatives to contain costs and promote a healthier lifestyle (the Enhanced Care Pilot, the Patient Centred Medical Home, and the Personal Care Benefit),” it wrote. “The new 50 per cent duty on sugary soft drinks, candies and pure sugar imports (which will be raised to 75 per cent in April 2019), represents a further initiative. The revenues to be raised (roughly $10 million in a full year at the higher rate) should be clearly seen as earmarked to specific programmes that expand health promotion and encourage healthy lifestyles.”

Moreover, the panel says, the private medical care sector must come under some form of regulation.

“The private medical care sector in Bermuda is largely unregulated, raising concerns about both the cost and quality of the care provided, of diagnostic testing and of pharmaceutical products,” the panel writes. “Further efforts are needed to strengthen the regulation of private sector providers (including their use of health technology) as a means to reduce duplication that adversely impacts healthcare costs and exposes patients to unnecessary risk. As in our 2017 report, we believe that an appropriate regulatory infrastructure with enforcement resources remains a necessary element of any strategy for cost containment in Bermuda’s healthcare sector.”