In December 2015 the World Bank reported that the East Asia and Pacific (EAP) region—home to some 211 million elderly or one-third of the world’s population aged 65 years and above—is aging faster than any other region in the world today.
Such rapid aging is unprecedented. It took France 115 years to transition from a “young” to an “old” society—a point where seniors comprised at least 14 percent of the population. The United States took 69 years; the Russian Federation, 50; and the United Kingdom, 45.
In contrast, the World Bank estimates this transition will only take 15 years in Vietnam; 20 in Lao PDR, Malaysia and Indonesia; and 25 in Timor Leste, Mongolia, Myanmar and Cambodia. Only the Philippines (30 years) and Papua New Guinea (40 years)—with their comparatively younger populations—appear to be taking slightly longer.
Societal aging at this fast rate poses significant risks to an economy’s public finances and health-care system, especially when aging is associated with increased morbidity and risks for noncommunicable diseases (NCDs), like dementia and diabetes.
A recent report by the Asia, Pacific Risk Center (APRC) estimated that 14 Asia-Pacific economies—Japan, Hong Kong, Australia, New Zealand, Singapore, South Korea, Taiwan, China, Thailand, Vietnam, Malaysia, India, Indonesia and the Philippines—will incur a cumulative $20 trillion in elderly health-care expenditures between 2015 and 2030.
That amount is equivalent to the combined 2015 GDP of the 14 economies and represents half of the group’s projected health-care expenditures for the said period. It points to a gargantuan challenge, especially when the APRC projected that annual elderly health-care costs will grow five times as much as they were last year in just 15 years—from $500 billion in 2015 to $2.5 trillion in 2030.
These spiraling costs will test the capacity of governments to fund and implement their elderly health-care and social-pension programs. They also demand that enough investments are poured into building the necessary infrastructure, like hospitals and nursing homes; and training the needed human capital, like caregivers, doctors and gerontologists.
If governments are unable to collect adequate taxes, roll out cost-effective programs and manage the changes brought by an aging population, they run the risk of falling into fiscal crises and social instability. Efforts to sustain any long-term economic growth and development would be severely hampered.
To be sure, the burden of the spiraling health-care costs will not be carried equally by the 14 economies the APRC studied. In fact, the Philippines—in the midst of reaping a demographic dividend—will experience the full cost of an aging population much later than its counterparts in the study.
This does not mean, however, the country can dilly-dally. A 2015 University of the Philippines Population Institute study projected the country’s senior-citizen population would balloon from 6.2 million, or 6.8 percent, of the population in 2010 to 12 million, or 10 percent, of the population in 2025. This aging boom may coincide with an equally significant spike in health-care expenditures.
Urgent action is, indeed, needed, considering that the Coalition of Services for the Elderly recently estimated that more than half of Filipino senior citizens receive no pension at all. Or that, in a 2015 Global Aging Institute and Pru Life UK survey, 9 out of 10 Filipino workers interviewed said they were anxious about being poor in their retirement, as they struggle with little savings and almost no government support.
The first week of October marks Elderly Filipino Week—an annual nationwide celebration that emphasizes the important role the elderly play in Philippine society. A more long-lasting tribute would be to start discussing and acting on our national policies on aging. And we must do so urgently, given the prohibitive costs we may incur.
E-mail: angara.ed@gmail.com.