I sometimes wonder when we will stop making the bull case for certain health care subsectors that starts with something like "ten thousand people turn 65 every year." Life spans being what they are we have to stop at some point, right? Well not if you were at the AHA Summit this past week. Probably not at any conference you have been to this year. Yes, the post-65 generation is a large group of people - about 60M - but the last post-war cohort was born in 1964 which means they turn 65 in 2029, just six years from now. Between now and then, however, annual growth is below recent trends - thanks to all things COVID and smaller cohorts.
For the MCOs, planning for the Boom-ocalypse begins in the spring of next year. For other sectors and based on the comments at the AHA Summit it sounds like it begins in the rear view. MCOs have the advantage of employing fleets of actuaries. You local non-profit hospital does not.
The lack of growth in the Medicare population is especially important when you consider how much of the American health care system is designed to accommodate it. It is already clear that business models designed for the Medicare population like home health are under stress. Inpatient Rehabilitation, Long-term Care Hospitals, drugs and devices that target older individuals may follow.
Making money from the Medicare program becomes less important which means its regulatory leadership will wane. We are already seeing UNH transforming itself into a shadow form of CMS as it establishes platforms for test developers and presses hard on denials of inappropriate care. CMMI has lost most of its leadership status in innovation. Payments to physicians have practice wondering if they should even accept Medicare patients much like they questioned Medicaid enrollment in the 1990s.
Let me know your thoughts.
Emily Evans
Managing Director – Health Policy
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