The economic consequences of millennial health

November 6, 2019

Topics: Quote of the Day

By Moody’s Analytics
BlueCross BlueShield, November 6, 2019

In the course of the last several years, millennials have shown that they are very different from previous generations in a number of ways. Defined as the generation born from 1981 to 1996, they are the largest, most educated, and most connected generation the world has ever seen. However, recent data also show the beginnings of troubling generational health patterns that could hamper the future prosperity of millennials, and in turn the prosperity of the U.S. If the current pace of decline in millennial health continues unabated, the long-term consequences to the U.S. economy could be severe.

Millennials now make up the largest share of the U.S. population and labor force, placing them at the heart of U.S. economic growth as consumers, workers, and business owners. How their health plays out in the years ahead will determine not only the overall health of the country, but also its potential economic trajectory. By using Blue Cross Blue Shield Health Index data to analyze these questions, we are able to take a much broader and forward-looking view of these impacts relative to previous studies. In our examination of millennial health patterns we have found several interesting and concerning findings, particularly regarding future impacts on healthcare costs and economic activity.

1. Millennials are seeing their health decline faster than the previous generation as they age. This extends to both physical health conditions, such as hypertension and high cholesterol, and behavioral health conditions, such as major depression and hyperactivity. Without intervention, millennials could feasibly see mortality rates climb up by more than 40% compared to Gen-Xers at the same age.

2. These accelerated declines will result in greater demand for treatment and higher healthcare costs in the years ahead. Under the most adverse scenario, millennial treatment costs are projected to be as much as 33% higher than Gen-Xers experienced at a comparable age.

3. Poorer health among millennials will keep them from contributing as much to the economy as they otherwise would, manifesting itself through higher unemployment and slower income growth. Under the most adverse set of projections, lower levels of health alone could cost millennials more than $4,500 per year in real per-capita income compared to similarly aged Gen-Xers. Such impacts would be most likely concentrated in areas already struggling economically, potentially exacerbating instances of income inequality and contributing to a vicious cycle of even greater prevalence of behavioral and physical health conditions.

Counting the Costs

The logical first consequence of a less healthy population is an increase in the amount of treatment that will need to be accessed. This, of course, is not without cost. Therefore, the first step in examining the consequences of millennial health patterns over time is to try to quantify the increased healthcare costs associated with faster declines in overall health. To do this we rely on our 10 year projections of millennial health across ages, genders, and conditions. The cost of care can vary greatly based on all three of these criteria.

Given the projected increase in prevalence among the top 10 conditions examined as part of this study, we expect a sizable increase in the number of millennial patients seeking treatment over the next decade under both the baseline and adverse scenarios.

Because a majority of millennials are still in their late 20s and early 30s it is unlikely that we will experience the full brunt of these costs within the next decade. The youngest millennials won’t turn 40, around the time when most of these conditions historically begin to reach critical mass, for another 17 years. This means that the projected increases in millennial costs of care over the next decade may be just the tip of the iceberg, with more serious implications beyond the current forecast horizon.

As millennials continue to age beyond the next decade, higher prevalence rates for physical conditions such as hypertension and high cholesterol mean these costs will rise even higher compared with previous generations over the long run.

The increase in the cost of treatment for millennials will contribute to the already growing impact of healthcare costs on the U.S. economy. The Centers for Medicare and Medicaid Services estimates that national health expenditures already make up more than 17% of the U.S. economy, growing to nearly 20% within a decade. This carries significant implications for the nature of U.S. economic growth, particularly with regard to consumer and government spending.

Expanding out-of-pocket costs for consumers will limit their ability to spend on other goods and create additional stress within already strapped household budgets.

Less Healthy, Less Wealthy

The second important consequence of a less healthy working-age population is slower economic growth. An economy is traditionally measured by how much it is able to produce, via its gross domestic product. At its core, GDP is made up of two primary components, the number of individuals producing, and the amount that each individual is able to produce. Both of these components are threatened by lower levels of health in the workforce.

As part of our previous research with the BCBS Health Index we established that workers who are less healthy also tend to be much less productive, generating lower per-capita incomes and being employed less often. As millennials become less healthy, they are more likely to miss work or stop working altogether. Furthermore, even when they are working, health concerns may prevent them from being as productive as they would have been had they had the same health profile as previous generations.

In addition to making up a larger portion of the overall population, millennials are now the largest contributors to the U.S. labor force.

If a majority of American workers are generating less income than they otherwise would, we can reasonably assume that overall productivity and thus GDP will also grow at a slower rate than if millennials had exhibited similar health outcomes to previous generations.

In addition to a potentially slower rate of headline economic growth, millennial health patterns have the potential to exacerbate some underlying economic issues as well. Income inequality, for example, has grown in recent decades for a variety of reasons. Having previously established the fact that there is a strong correlation between overall health and several important economic measures, we can conjecture that some of the areas that may see the largest economic drag from lower millennial health are areas with already below average economic outcomes.

These findings should serve as a call to action among policymakers and the healthcare community at large to address declining health among younger Americans before the more severe consequences in this analysis become reality. If nothing is done, the impacts could be game-changing for the U.S. and its economy.

https://www.bcbs.com…

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Comment:

By Don McCanne, M.D.

Our nation is facing two interrelated problems that demand immediate attention. Income and wealth inequality have had a deleterious impact on the personal finances of a majority of Americans, resulting in insecurities of essentials such as housing, food, and health care. Our health care financing system has compounded the problems by diverting health care dollars to worthless endeavors such as our profound administrative excesses and to paying very high prices that shift ever more health care funds to the wealthy. This has resulted in personal financial hardship and further impairment of access to our health care delivery system.

Today’s report should alarm the millennials. They are now the largest contributors to the U.S. labor force, and their role in driving the economy and its impact on the people will only grow larger. Yet they are already experiencing greater financial hardship and significantly poorer health than the generation preceding them. Health care and income inequality are already at a pre-crisis level requiring immediate attention.

The plutocrats may have the resources to implement much needed solutions to these problems, but, unfortunately, they have shown us that their only interest is to maintain control of government policy which continues to move more wealth to the top, further draining the masses of funds that are essential to meet the socioeconomic needs of the individuals in our society.

When the private sector is failing it becomes imperative that the stewards of our public policies move in to correct the deficiencies, of course with the consent of the people. In this case, we desperately need public policies that would establish a health care financing system that includes everyone, reduces waste, removes financial barriers to care, and is funded equitably, through taxes, so that health care is affordable for everyone. That is precisely what a single payer Medicare for All program would do. But we also need public policies that would address the extreme inequalities in income and wealth – not eliminate inequality, but rather make it equitable. There is an overlap of these two arenas that cry out for public policy solutions – health care and income inequality. The policy solutions are complementary – move to a single payer financing system that is effective and equitable, and pay for the system through equitable, progressive tax policies.

The millennials need to wake up. Their day is just around the corner and they are now stepping into that pit that is portending disaster.

And, oh, besides health care financing and equitable distribution of income, they have another issue that requires public policies – the disaster of climate change. If they don’t do something quick then it is unlikely that there will be a need for health care financing and for equitable distribution of income on a planet in which Homo sapiens is an extinct species.

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