What is driving the cost of health care?

What is driving the cost of health care?

Aging population

Let’s face it: We’re getting old. In 2011, 14.3% of Oregonians were 65 years of age and older, up from 12.8% in 2001, according to the Census Bureau. This ranked Oregon 15th among the 50 states, higher than the U.S. overall at 13.3%. Percentages are much higher in southern and coastal areas that have attracted many retirees. For example, Josephine and Curry counties had 23.0% and 28.3%, respectively, of residents 65 and older. And as baby boomers continue to age into this demographic it will continue to swell.

This population creates a strong demand for health care. Most of its services are paid for by Medicare, which the OAHHS shows surpassed private insurance within the last few years to become the biggest patient revenue source at more than 40%, though Medicare beneficiaries represent only 17% of Oregon’s 2011 population, and the state ranked 46th for per capita Medicare billings at $13,752. Oregon also had the lowest nursing facility occupancy rate in the nation in 2010, according to the Kaiser Family Foundation.

As the state and nation get grayer, they’ll need more medical facilities and workers. Health care jobs have already outstripped the private sector overall, growing 64% in the last 20 years. The sector likewise grew from 6.3% of the state’s gross domestic product in 2006 to 6.9% in 2009. This requires huge investment in infrastructure and human capital, yet does not make products for export or generate new income. Instead it often bankrupts sick residents, devours government subsidies and hobbles the state with a population that consumes services but does not produce taxable income. Getting old is no fun.

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