Health Affairs, 23, no. 2 (2004): 168-174 doi: 10.1377/hlthaff.23.2.168 © 2004 by Project HOPE	New Online   Senate Health Reform Bill   Rewarding Providers   Public Option Policy Brief   Health Reform & Abortion   Delivery System Reform

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Commentary

The Impact Of The ‘Aging Of America’ On Children

Abstract

 
The continued demographic trend of the "aging of America" has many implications for U.S. society. Although their population has remained relatively constant, children are becoming a smaller proportion of the overall population. The rapidly changing age-related U.S. demographics raises issues we have not yet chosen to address. These changes have important implications for children and will become manifest in the financing of both public programs and private markets for health, education, and social services, whether or not specific political actions are taken. Investment in children’s health can affect the health and productivity of the next generation of Americans.

There are more Americans over the age of fourteen in the United States now than at any other time in our history (growing from 131 million in 1963 to 221 million in 2000), and their numbers are expected to continue to increase. For example, we expect to see the proportion of Americans age sixty-five and older grow from 12.7 percent in 2000 to 20.0 percent in 2030.¹ While the adult population has been growing, the absolute number of children under age fourteen dropped monotonically from 1966 to 1982, meaning that there was a widening gap between the number of children and adults during that period. Although growth in the number of children since 1982 has led to a steadying of the proportion of children to adults since then (hovering between 27 and 28 percent), the proportion is much lower now than it was in 1963, when it was 45 percent; it is not clear that growth in the population under age fourteen will keep pace with growth in the number of adults, raising the specter of a widening gap between children and adults.

Our society has always felt tension regarding the manner in which resources are divided among different age segments of the population. The rapidly changing U.S. age-related demographics raises issues that our society has not yet chosen to address. These changes have important implications for children, which will become manifest in both public programs and private markets for health, education, and social services whether or not specific political actions are taken.

Basics Of The Issue

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With current U.S. health care spending at approximately 14 percent of gross domestic product (GDP), there may not be much new governmental investment in health care over the coming decade. If resource allocation has at least some basis in proportional population demographics, then a gradual eroding of public financing of children’s health services is likely. For example, if spending were to be held at relatively constant levels or even grow modestly, the increase in the absolute number of adults attempting to receive services will grow, while the absolute number of children remains constant. It then seems likely that at least a portion of existing funding as well as the bulk of any new funding will go to the segment of the population whose proportion is growing.

This trend will be compounded by the fact that an increasing amount per person is being spent on people over age sixty-five, likely because of the increase in new technologies and pharmaceuticals aimed toward this population. For example, in 1987 an average of $1,033 was spent for health care for a child under age six, compared with $3,858 for person over age sixty-five. By 1998 these figures had changed markedly: Inflation-adjusted spending for children under age six had fallen by 12 percent, to $905, as spending for a person over age sixty-five had risen 38 percent, to $6,265.² The implications of this finding for access to care and for health are unclear and controversial. For example, even though pediatric office visits for asthma (the most common chronic disease of childhood) increased by an average of 3.8 percent per year from 1980 to 1999, childhood deaths from asthma increased 2.47 per year during the same time period.³

Although recent Medicaid expansions have resulted in an overall increase in the number of children served, the amount of program resources dedicated to children in fiscal year 2000 ($35.2 billion) is dwarfed by the $133.1 billion spent on those over age eighteen, $50.0 billion of which was dedicated to people over age sixty-five.⁴

In 1997 Congress created the State Children’s Health Insurance Program (SCHIP) to provide health insurance to uninsured children in low-income families. Some states have also attempted to divert a portion of these funds to provide health care to some childless adults. At least three states attempted to stretch the program beyond its original purpose because of depleted funds and large numbers of uninsured people.⁵

The stress on the federal budget will only become more acute as the initial wave of the estimated seventy-six million baby boomers turns sixty-five in 2011.⁶ At that time, the financial responsibility for their care will begin shifting from employment-based private insurance to the publicly financed Medicare program.

An additional pressure on the system of resource allocation is political in nature. It is well known that U.S. elders are a strong voting bloc. As such, the political imperative to increase funding proportionally to this growing age group, even at the expense of other segments of the population, will be increasingly stronger.

Early Indications Of The Financial Impact

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The most important clinical preventive service for children is immunization. Over the past fifteen to twenty years, tremendous effort and public resources have been devoted to increasing immunization rates in our country. Unfortunately, as the United States struggles to contain overall health care spending, the increasing costs of new vaccines are already beginning to strain the public purse. The most recent vaccine approved for use prevents pneumoccocal disease, the most common cause of bacterial meningitis and pneumonia in children. However, this vaccine is very costly and has been reported to cause tremendous strain on state budgets.⁷ Some states have chosen not to provide this vaccine to segments of their population (who receive all other vaccines from government purchase) because of the cost. The federal government also has now begun to consider cost in its vaccine recommendations. Unless funding for childhood immunization programs is prioritized to grow concurrent with the rising costs of both improvements in existing vaccines and the development of new ones, further strain on state and federal health budgets exacerbated by the demographic shift will likely result in greater erosion in the provision of new vaccines.

An additional program area feeling the impact of diminished funding on children is Medicaid. For most states, Medicaid is the largest or second-largest budget item. With the current crises in state budgets, curtailment of Medicaid spending is a high priority for many states. Options being considered include tightening the eligibility requirements for children based on their relative poverty status and eliminating some benefits.⁸ However, it is not children who are driving the increases in Medicaid spending. Rather, it is the impact of the aging population: Between fiscal years 1978 and 1998, real per capita spending for elderly Medicaid beneficiaries grew the fastest among all groups (4.9 percent, compared with 2.8 percent for children and 3.7 percent for the blind and disabled).⁹

Emphasis On Components Of Insurance Coverage

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The majority of Americans who have private health insurance become eligible to receive their coverage as a result of their employment.¹⁰ Most employee insurance programs are designed to ensure the health of employees so that they remain productive components of the workforce. As a result, much new investment has been designated for the development of programs to prevent and manage diseases or conditions that both affect productivity and are high-cost items in the cost of health insurance for an employer.¹¹ Such conditions as hypertension, diabetes, and arthritis dominate the design of insurance policies and benefits.

Similarly, the majority of children insured through private health insurance become eligible to receive coverage via the dependent-care options available to their working parents. However, benefit programs are designed so that cost-sharing arrangements between employers and employees disadvantage dependent coverage. In both 2001 and 2002 employees paid approximately 15 percent of the cost of single coverage but 27 percent of the cost of family coverage.¹² Such practices affect the take-up rates of dependent coverage, especially among lower-income and single-parent families.¹³ Many dependent-care policies require copayments and deductibles for preventive care (including childhood immunizations), vision care, dental care, and mental health services. Just as employee coverage is designed to ensure maximum productivity, similar efforts must be made to ensure the maximal potential productivity of our nation’s future.

Federally Sponsored Research

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It is also likely that public investment in health care advances will follow these demographic trends. If an increasing proportion of Americans suffer from certain diseases as a result of aging, it stands to reason that an increasing proportion of federal research will be dedicated to those problems. Without sizable "new money" allocated for these efforts, the investment will come from other areas of the federal research budget, and a realignment of proportional spending will ensue.

The case for maintaining, or even raising, the investment in research for children is compelling on many grounds. Many diseases that become manifest in adults are known to have their origin in childhood. A sizable portion of these are attributable to unhealthy lifestyle choices made in youth. Examples such as obesity, substance abuse, and smoking highlight the potential of preventive efforts in childhood to have a major impact on adult morbidity. Research into the chronic diseases of childhood (such as juvenile rheumatoid arthritis and asthma) also have the potential to improve the life and productivity of an important and growing segment of the population. As an increasing proportion of these children now live to adulthood, society has a greater interest in attenuating their disease processes or developing cures.

Private Investment For Health

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Another implication of the aging of America on the future of children’s health is its potential impact on private investment in the development of new pharmaceuticals, treatments, and devices. Private investment usually follows opportunities for market growth. The growth market for health care in the United States is clearly at the upper end of the age spectrum. Thus, it is likely that private research and development increasingly will be targeted to the adult population. This focus will reduce the potential for improving health care for our nation’s children.

Drug Approval Process

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A further example of the dilemma is found by examining the number of drugs approved for use in children by the Food and Drug Administration (FDA). Only about 25 percent of drugs in use have been tested and labeled for pediatric patients.¹⁴ Pharmaceutical companies generally have viewed the pediatric market as having limited profit potential. This has resulted in very real consequences for children.

The most common example was the widespread damage caused by tetracycline, an antibiotic commonly prescribed to, but never tested on, children in the 1960s and 1970s. The result was a plethora of children with at best permanently discolored teeth and at worst soft, malformed, and cavity-ridden teeth that required replacement.¹⁵ Other drugs used in children without the benefit of clinical trials to determine their safety in this age group have resulted in other problems such as irregular heart rhythms (BuPivacaine) and cardiac arrest (Propofol).¹⁶ In the early 1990s the FDA implemented voluntary measures to encourage pediatric studies, but these were mostly unsuccessful. In a more definitive approach, the Voluntary Pediatric Exclusivity Provision was contained within the Food and Drug Administration Modernization Act (FDAMA) of 1997.¹⁷ This program provides six months of prolonged patent protection for manufacturers who perform research on existing drugs for pediatric applications and has brought more than sixty drugs (already approved for use in adults) to pediatric patients. Further, more studies have been conducted for pediatric indications for existing drugs in the past five years than in the previous thirty years combined.¹⁸ The exclusivity provision was renewed in January 2002 and extended through 2007. However, this program has faced criticism from some who feel that it resulted in excessive profits for manufacturers at the expense of adult patients, who have experienced a delay in the availability of specific drugs as generics.

Another effort was the FDA’s 1998 "pediatric rule," which required manufacturers of new drug or biologic products to conduct pediatric studies when the FDA determined that a product was likely to be used in a substantial number of pediatric patients or would provide a meaningful benefit over existing treatments. However, this rule faced even greater opposition. In December 2000 the Association of American Physicians and Surgeons, the Competitive Enterprise Institute, and Consumer Alert filed a lawsuit against the pediatric rule. In October 2002 a federal district judge overturned the rule. The secretary of health and human services (HHS) has announced that his department will seek introduction and swift passage of federal legislation to give the FDA authority for such measures.¹⁹

Because the overall market for pediatric medications or childhood vaccines is not as lucrative as the market for adult pharmaceuticals, the federal government must ensure that these and similar incentives are in place that result in a fair profit potential for private research and manufacturing companies. Without such inducements, the natural flow of capital will be away from the needs of children, not toward them.

Where Do We Go From Here?

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Depending on one’s perspective, a change in the proportion of public and private health care spending and investment to mirror changes in population proportions is either an appropriate response to the changing needs of our country or a short-sighted approach that will have serious negative implications for future generations.

The case for increased spending and investment for the growing cadre of seniors is compelling. However, if the increases come at the absolute or proportional expense of children, then we believe that the price is too high. To ensure a next, and a next, generation of healthy Americans, we must develop mechanisms that encourage private investment in improving the health of children while ensuring continued public support.

It is not our intent to instigate a generational confrontation over resources, but rather to make clear that a silent battle is already taking place. The silent nature of the current battle stacks the deck against children, as the general inertia of the system, fueled by demographic change, has resulted in a continuous process of erosion of the resources dedicated to the health of our nation’s youth. If changes are not made that secure continued public investment and create an environment that encourages private investment for children’s health, the future of our country will be affected negatively. This commitment to our children makes sense both in the immediate care and treatment of our young, and also in helping to understand and potentially prevent many of the antecedents of chronic diseases in the adult population.

Editor's Notes

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This research was funded in part by the American Board of Pediatrics Foundation.

Gary Freed is the Percy and Mary Murphy Professor of Pediatrics and Child Health Delivery and directs the Division of General Pediatrics and the Child Health Evaluation and Research (CHEAR) Unit at the University of Michigan in Ann Arbor. Kathryn Fant (kef{at}umich.edu) is a research associate of pediatrics at the CHEAR Unit.

NOTES

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1. U.S. Census Bureau, "Projections of the Total Resident Population by Five-Year Age Groups, and Sex with Special Age Categories: Middle Series, 1999 to 2100 (NP-T3)," www.census.gov/population/www/projections/natsum-T3.html (3 February 2004).
2. National Center for Health Statistics, "Expenditures and Sources of Payment for Health Care According to Selected Characteristics: United States, 1987, 1997, and 1998," Table 118, www.cdc.gov/nchs/data/hus/tables/2002/02hus118.pdf (16 February 2003).
3. L.J. Akinbami and K.C. Schoendorf, "Trends in Childhood Asthma: Prevalence, Health Care Utilization, and Mortality," Pediatrics 110, no. 2 (2002): 315–322.[Abstract/Free Full Text]
4. Centers for Medicare and Medicaid Services, "Table 5: Medicaid Expenditures—Fiscal Year 2000, by Type of Service and Age Group, All States," cms.hhs.gov/medicaid/msis/00total.pdf (21 January 2004).
5. R. Pear, "A Study Finds Children’s Aid Goes to Adults," New York Times, 8 August 2002.
6. B.C. Strunk and P.B. Ginsburg, "Aging Plays Limited Role in Health Care Cost Trends," Data Bulletin no. 23 (Washington: Center for Studying Health System Change, September 2002).
7. T.A. Lieu et al., "Pediatricians’ Views on Financial Barriers and Values for Pneumococcal Vaccine for Children," Ambulatory Pediatrics 5, no. 2 (2002): 358–366.
8. V. Wachino and M. O’Malley, "Medicaid Update: What Changes Are States Considering in the Face of Fiscal Pressures?" June 2002, www.kff.org/medicaid/upload/13978_1.pdf (3 February 2004).
9. U.S. Department of Health and Human Services, A Profile of Medicaid: Chartbook 2000, September 2000, cms.hhs.gov/charts/medicaid/2Tchartbk.pdf (21 January 2004).
10. P.F. Cooper and B.S. Schone, "More Offers, Fewer Takers for Employment-based Health Insurance: 1987 and 1996," Health Affairs (Nov/Dec 1997): 142–149.
11. R. Pear, "Emphasize Disease Prevention, Health Secretary Tells Insurers," New York Times, 22 January 2003.
12. B.C. Strunk, P.B. Ginsburg, and J.R. Gabel, "Tracking Health Care Costs: Growth Accelerates Again in 2001," Health Affairs, 25 September 2002, content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.299 (15 December 2003).
13. A. Rolett et al., "Parental Employment, Family Structure, and Child’s Health Insurance," Ambulatory Pediatrics 6, no. 1 (2001): 306–313.
14. J. Heinrich, U.S. General Accounting Office, "Pediatric Drug Research: Substantial Increase in Studies of Drugs for Children, but Some Challenges Remain," Testimony before the Senate Committee on Health, Education, Labor, and Pensions, 9 May 2001, www.gao.gov/new.items/d01705t.pdf (16 February 2003).
15. J.G. Howie, "Tetracyclines and Young Children," British Medical Journal 5880, no. 3 (1973): 589.
16. M. Orlinsky and E. Dean, "Anesthetic and Analgesic Techniques," in Clinical Procedures in Emergency Medicine, 3d ed., ed. J. Roberts and J. Hedges (Philadelphia: W.B. Saunders, 1998), 454–473; and R.J. Bray, "Propofol Infusion Syndrome in Children," Paediatric Anaesthesia 8, no. 6 (1998): 491–499.[CrossRef][Web of Science][Medline]
17. U.S. Food and Drug Administration, "Drug Research and Children," January–February 2003, www.fda.gov/fdac/features/2003/103_drugs.html (15 February 2003).
18. Ibid.
19. Ibid.

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