Was thinking about this over the past couple days, i’m sure i’m not the only one to question it, but i haven’t really seen any reports on it.
It seems that the majority of this healthcare is coming online now to support the aging baby boomers.
What happens in 10-20 years when the boomers start dying off in large numbers, the population after the boomers isn’t nearly as large, and probably won’t need the amount of medical and aging (nursing homes, hospice, etc.) facilities we have created.
In your opinion, is a healthcare bubble happening?
Define “bubble.” In finance, its typically means prices of some asset class bid up without underlying economic reason. e.g. The price of XYZ going up just because it’s going up and more nad more folks jump on the bandwagon. Healthcare is not in a bubble by that definition.
Healthcare has a very different issue.
Actual demand is going up and will continue to do so for 20+ years. You’re right that eventually *if *the elderly population declines demand will decline with it. But that is not the usual definition of “bubble”. The overall economy is constantly growing here and shrinking there due to shifts in demand. Some are fairly predictable, e.g. those due to demographics. Others are due to fashion or politics or random who-knows.
What I suspect *is *happening with healthcare is that things are being marginally overbuilt now as a way to lock in the capability for volume while margins are still high. ISTM that as the Boomers really start aging en masse, we’ll discover that collectively all the Medicare and private insurance can’t pay for all the care demanded at the prices the med industry is used to charging now.
So either a lot of people don’t get treatments, or the treatments get cheaper. My bet is some of the former and a lot more of the latter. So the industry is doing their capital investment now while they have margins and hope to make it up on the volume later when they don’t have as good a margin and couldn’t afford to make as much capital investment then.
Like in any capital investment effort, there is always the risk of each competitor assuming they’ll both grow in size and in market share. That’s how the demand doubles in size, but supply triples, and somebody goes broke. There is certainly the risk of that happening is some geographic areas.
Who the Boomers are has variable definitions but is often those born from 1946 to 1965, thus 52 to 70 now.
You can see from this population pyramid that the populations coming after that cohort are in not in fact much smaller and in fact the Millenniels are a larger cohort than are the Boomers. Boomers are living longer and those behind them are going to add to their ranks as the Boomers don’t die quite as soon.
That said there is much more to consider than just the size of the cohorts and little that have much to base educated guess on.
We can possibly reasonably estimate the increase in lifespan but increasing how much morbidity each age cohort will have and for how long each group will survive with significant morbidity is much tougher to do.
By 2030 the youngest Boomers will be 66, “young old” and a fair number will be “old old”, 85 and over. More of the Boomers, and one presumes more yet of those who follow, are expected to live to become the “old old” than in years past. At what point does the morbidity rate really start to spike as time goes on?
On the optimistic front is the fact that age-specific dementia rates are decreasing. Is there some wall however that gets hit? Does the rate jump up as 85 and over gets hit? Will we succeed in having longer lifespan and at the same time a compression of morbidity such that there are fewer years lived in poor health?
To really model future demands we need to know much more than the size of the cohorts and more than expected lifespans; we need to be able to predict healthspans as well.
My cohort, which really eats up the health care, was very small, since I was born during the depression (1937). I had everything really easy. Jobs fell into my lap; I even got totally unsolicited offers. When I finished my PhD, my advisor made one phone call and got me an offer. So different even ten years later. If you think demand for health care is high now, you ain’t seen nothing yet. Ten years from now it will be horrendous.
We boomers have been the elephant swallowed by the python.
Every step of the way, we swelled the ranks.
Maternity wards
Elementary schools
High Schools
Colleges
Housing costs skyrocketing as we (finally) built nests
Now, we begin to use healthcare in serious quantities
Social Security is being bled dry
By and by, there will be new cemeteries/columbariums/crematoriums. designated patches of land and sea for spreading cremains.
The VA medical facilities will either get it right or be destroyed and simply merged with Medicare.
I haven’t noticed many of the 1950’s Elementary Schools/ 1960’s High Schools/1970’s College Regional Campuses being razed.
I once thought that once we boomers were gone, many of the commute-from-Hell suburbs would be abandoned/re-populated with the long-term homeless.
“somebody’s rule” - “all needs expand to occupy all available resource” will probably hold true a few more generations.
Yes Hari the OP’s timeline of Boomers dying off in large numbers in ten years is way premature. The average Boomer will, in 2030, 13 years from now, be only 74. As a generation they will just be beginning to consume healthcare in larger amounts. 20 to 30 years is when you can start to expect them to drop off the mortal coil map, maybe. The big costs in the elderly are mainly in the last year of life … it’s just that last year is later in life than it used to be.
But again, not too far behind is the even larger Millennial cohort. A group is more commonly obese than the Boomers were at the same ages. They are likely to be having chronic diseases that minimally need management at earlier ages than the Boomers ever did.
I am though wondering what the OP is referencing by all “this healthcare is coming online now.” It isn’t hospital capacity. Hospitals are decreasing capacity and sometimes just shutting down. There has been no explosion of new doctors graduating nor a major increase in those selecting primary care.
Healthcare is reconfiguring and reorganizing to be sure. Becoming more focused on population health and higher value delivery methods. But there really has been no major new infrastructure investment to support the Boomers and the improvements to the systems to manage and prevent chronic disease states will likely serve the needs of the Millennials more than the Boomers.
IME it *seems *like new medical complexes are growing like weeds. And many hospitals are expanding and building new wings and palatial outpatient clinics as fast as they can. Construction in the nursing home / assisted living industry also *seems *to be booming.
This was certainly true a few years ago when I lived in the Midwest and is doubly true here in Retiree Central.
It may well be a selection effect where what one sees depends on where one lives and looks.
One thing I suspect is happening is the growth and construction is entirely in high SES areas and the closures and shrinking ratty facilities are concentrated in the much larger low SES urban and perhaps rural areas. If so we could see net shrinkage at the national aggregate level and still see robust growth in the areas where the typical aging patient will have Medicare, plus self-paid Medigap, plus self-paid supplemental and LTC coverage, plus available assets to spend if needed. Contrast with an area where the patient base is covered by Medicare only & struggles to pay routine co-pays.
Predicting the specific trajectory of Medicare reimbursement rates over the next 30 years is a fool’s game. Nonetheless I think pretty much everybody agrees the net trend will be downward in absolute dollars per line item, and doubly so relative to healthcare-specific inflation.
There are more millennials than baby boomers. 83 million vs 75 million.
However health care advances, and there is speculation we will move away from hospital care towards more care at home with lots of at home diagnostics. Cell phone type devices are going to play a bigger and bigger role in diagnostics, as will at home robotics.
So what could cause issues is in 40 years when the oldest millennials start needing nursing home care, but by then maybe nursing home care will involve hooking up a bunch of medical diagnostics to your cell phone and having at home robots take care of you. So there will be less demand for a centralized hospital or nursing home.
Your guess is right on the money, both rural and inner city poor areas have seen the bulk of the closures. The trends slowed some with the ACA and more having coverage.
There is also consolidation within the industry that impacts what you see.
Another issue that comes up will be the supply as well as the demand. In the city where I practice, most of the physicians are in their 50s to 70s. The number of physicians in their 30s and 40s is much lower, especially when you start looking at specialists. When the baby boomer physicians start to retire in large numbers, I think there is going to be a significant problem, at least when it comes to medically underserved areas like south Texas.