The Impact of Technology on Wealth, Aging, and Lifestyle

Wealth, lifestyle, aging populations, and technological advances are said to be having a major impact on the growth of healthcare demand. This essay considers the impact of each of these factors and discusses how successful the introduction of so called ‘sin-taxes‘ have been in changing behaviours and in supplementing healthcare funding.

Not only is good health important for the individual and their families but populations who remain healthy and economically active for longer can contribute to the economic security for the nation. However, despite the benefits there are also often financial challenges to be overcome by the increasing demand placed upon healthcare systems.

Wealth, lifestyle, ageing populations and technological advances are four broad factors that are commonly cited as leading to the growth of healthcare demand and subsequently increasing health expenditures. However, there is differences as to how much each factor contributes to the increase OECD projections, looking at data from 1995 to 2009, found that income (wealth) contributed to 42% increase in health spending growth; technological developments 46% and demography only 12%. In contrast, Dormant et al studies found that aging accounted for a 45% increase in health spend in France and similar studies in Japan cited 41% and 84% respectively for the periods 1992-2000 and 2000-2008.

Each of the four broad factors are inextricably linked. For instance, per capita spending on health care strongly correlates with national GDP indicating that increased wealth drives demand for healthcare. Wealthier nations are more likely to invest in new technologies; and services/treatments previously not available will become the expected norm; wealth also influences lifestyle with those able to afford health-promoting goods; healthy social activities and less financial stress and disadvantaged circumstances enjoying greater longevity. However, whilst recognizing the inter-relationship between them and the link with wealth the following paragraphs explore the impact of technology; aging, and lifestyle.

Technological advances in healthcare can lead to extraordinary benefits for patients and reduced costs by introducing more efficient cost-effective treatments; reducing morbidities and the length of hospital stays and increasing recovery time . However, they also require extensive funding in order to keep abreast of new advances (and compete in the healthcare technology market); extend the scope, range and quality of services available, which can result in increasing demand for treatments previously unavailable and extend the length of time that treatment continues to be provided for chronic conditions.

The contribution of technological advances is also inextricably linked to the increase in average lifespan in developed countries as the increasing capabilities of modern medicine have resulted in people who would have previously died from fairly severe and potentially fatal chronic diseases, surviving. The change in demographics, particularly the increasing number and proportion of people over the age of 65 in many countries of the world, is also often cited as a major contributory factor on increased demand and therefore concern regarding the impact of this trend on public expenditures. 

This is based upon the assumption that as we age we are more likely to develop and live with co-morbidities and long-term (or chronic) conditions for longer, therefore increasing expenditure. However, there are a number of studies challenging this assumption. Howse argues that it is wrong ‘to suppose that the capabilities of modern medicine to intervene in the course of degenerative disease are confined to fatal complications attendant on advanced disease’ citing evidence of international and intra-national variations in late life morbidity and disability and proposes that it is environmental factors including lifestyle as the only explanation for these variations.

Lifestyle entails all the behaviours that are under the control of individuals such as dietary habits and weight management; smoking/ alcohol/ drug taking; physical activity; sleep and rest; immunization against disease; compatibility with stress, and the ability to benefit from the support of family and society . Many health problems, such as obesity, cardiovascular diseases, different types of cancer are associated with individuals’ lifestyle choices .

Taking each of these factors together it seems reasonable to argue that enabling a healthier lifestyle and the continued pursuit of technological advances to intervene and reduce the impact of degenerative disease could in fact, in time, reduce the impact of demands placed upon healthcare demand by an ageing population. Perhaps it is therefore more prudent to explore a wider range of funding methods which are not adversely affected by the declining prcentage of revenue raised through income related taxes or contributions. 

One such method being explored is the introduction of so-called ‘sin taxes’ which aims to encourage healthier lifestyle choices and diets by placing ‘corrective’ taxes on products such as cigareetes, alcohol and sugary drinks which are believed to be over-consumed and harmful to health. By making these products more expensive and therefore reducing consumer demand for these products healthier ‘choices’ are encouraged, whilst at the same time raising revenue from the whole population. There appears to be extensive evidence of the positive impact such taxes can have on deterring smoking. 

However the impact on taxes on sugary drinks is more contested, with the positive impact questioned and objections that the tax burden falls disproportionately on the low income consumer. Whilst many countries now tax tobacco products the overall contribution, other than in France ‘sin taxes’ so far are generating only a tiny fraction of government financing for health. Whilst there is an argument that deterring people from consuming products that negatively impact on their health could reduce costs from health conditions associated with these products but when thinking in purely economic terms this does need to be offset by the loss of tax revenue as demand for these products reduce and the increase in pension costs as more people live longer. Therefore whilst sin taxes can influence behaviour they will not solve the financing problems of an ageing population.