We’ve often talked on this blog about the costs that a greying population will bring to many western nations, and how these costs are going to have to borne by a smaller tax base (as a proportion of the population). This cost is partly due to pension schemes (in New Zealand your pension is not means tested and kicks in at 65 years old – the current Government is refusing to even discuss raising the age at which it starts) but the cost is also due to the cost of healthcare. However, this article from John Lechleiter at Forbes magazine argues that we should not see health costs as a static figure to be projected into the future. Instead, we have been able in the last 100 years to develop cures for diseases that were considered incurable and the cost of these cures and treatments have decreased dramatically over time.

“Take polio. From 1940 to the mid-1950s, polio struck 400,000 American children and millions more worldwide. The epidemic peaked in the early 1950s with 58,000 new cases in 1952 and another 35,000 in 1953. But, thanks to the Salk polio vaccine, by 1957, new polio cases had been cut by 90 percent, and by 1960 the disease was almost entirely eradicated in the United States… The global impact is equally stunning. In the early 1990s, polio was still paralyzing 350,000 people each year in low-income countries. In 2013, the number of cases reported worldwide: 406.”

Not only was the disease practically wiped out worldwide but the cost of trteating it has reduced to practically nothing:

“Michael Milken has pointed out that, in the early 1950s, the cost of polio care in the U.S. was predicted to be $100 billion by the year 2000 – back when a billion dollars was a lot! In fact, he says, ‘today’s polio immunization programs cost one thousand times less than that and have virtually eliminated the disease.’… And, today, a dose of the vaccine costs as little as 11 cents.” 

Another example is the ongoing battle against HIV.  Lechleiter states that: 

“We’ve seen similar success in the fight against HIV/AIDS, which was once a death sentence anywhere in world. After HIV/AIDS first emerged in the United States in the early 80s, mortality rates climbed steadily for the next decade and a half….Since the approval of anti‐retroviral treatments (ART) in 1995, the AIDS death rate has dropped by more than 80 percent. Today, a 20-year old diagnosed with HIV can expect to live an additional 50 years. And while the number of people with HIV increased by 28 percent between 1996 and 2000 – primarily because of rising survival rates – hospital rates fell by 32 percent over the same period.”

The ability for human ingenuity, inventiveness and research to manage, treat and cure diseases is important for two reasons. First, it lowers the mortality rates and thus helps to increase population growth. Secondly, it means that the costs of treating diseases today cannot be accurately predicted into the future: who knows when a new effective treatment will come onto the market?

“…new medicines have contributed to a two-thirds decline in the death rate from coronary heart disease in the U.S. since it peaked in 1968. There are one million Americans who lived through 2013 who would have died last year at the 1960s rate.

Just one class of heart medicines – statins, which reduce cholesterol levels, thereby helping to prevent or delay heart disease – has eliminated the need for tens of thousands of costly surgeries and hospitalizations.”

So for example, one of the diseases that affect large numbers of elderly people is Alzheimer’s disease.  In the USA, more than 5 million people aged 65 years and older (one in eight) had Alzheimer’s in 2012.  The cost of health care, long-term care and hospice services was estimated to be around $200 billion. This is excluding the work of unpaid carers. 

“By 2050, barring the development of medical breakthroughs to prevent or more effectively treat the disease, the number of Americans with Alzheimer’s may triple to 16 million, with annual costs of care projected to reach $1 trillion. Without disease-modifying treatments, the cumulative costs of care for people with Alzheimer’s from 2010 to 2050 will exceed $20 trillion, in today’s dollars.”

But if we were to figure out a cure or effective treatment for Alzheimer’s before that time then the cost of treatment would nosedive, just like it did for polio and as it is for HIV. Now, I’m not saying that we will find a cure for Alzheimer’s, but it is a reminder that the future is unknown. Making projections about the cost of healthcare or continuing mortality rates based upon today’s experience can be an erroneous business.

Marcus Roberts was two years out of law school when he decided that practising law was no longer for him. He therefore went back to university and did his LLM while tutoring. He now teaches contract and...