America is a relatively young country as far as the percentage of individuals 65 years and older in the U.S. today. About 12% of the population in the U.S. is 65 years and older. However, that percentage is projected to increase to 20% within the next decade. Compare those numbers with that of other countries like Japan with the highest percentage of seniors currently at 21.5% of the population. Global aging affects all aspects of our society: work, health care, retirement, services and housing, among others. One of the major challenges is what we call the dependency ratio which means that for every person age 65 years and older there will be fewer than two persons in the workforce and available to care for the older generation. Exceptions are those countries with high birth rates (Mexico, Iceland and Turkey) or in countries like Australia, Canada and New Zealand with high immigration. However, in most countries the dependency ratio will sharply increase from 2020 to 2050. It is becoming more important that we create new ways to care for this aging population that is cost effective and dignified. The U.S. has the highest per capita health care expenditure in the world with a per capita cost per individual of $6,714. Japan, on the other hand, has the lowest health expenditure with a per capita expenditure of $2,581, half of that of the U.S. Most of the expenditure in Japan is paid by the government.
During the Ashoka Summit held this month we were able to discuss with other Fellows challenges facing their countries. Masue Katayama, a Fellow from Japan, has worked for the past twenty years in providing services to the older population in Japan. She came to learn how our firm has been able to change how we care for this older population. We believe that the global financial crisis is pushing us to make due with less and to learn how to use government funding more efficiently. Our firm has a proven track record of being able to service three times as many seniors with the funding the government spends on one. Japan, along with many European countries, has older people and lower health care spending than the U.S. They do this by fixing prices and manipulating prices to keep costs down. Every two years the price of each treatment, test and medication is examined to see if excess profits are leading to overuse and if so the price is cut. This is not done in the U.S. because those who profit from high prices are so powerful. This rationing and price cutting impacts the ability to control chronic illnesses at an early stage. Instead of rationing, Japan should look at ways to improve people’s lives by systematically changing lifestyles through better diets, exercise, medication management and supervision. This is something that Japan and other European countries can learn from the U.S.
Masue and I sat down to establish a collaborative effort that will enable us to learn from each other. She visited one of our affordable assisted living facilities and was impressed with the home atmosphere and the improvement in the physical and cognitive health of our residents. We agreed to formalize this collaboration by her sending a group of her operators to the U.S. for a month to live and learn at one of our facilities. Mia will do the same as we know that there are lessons to be learned from Japan as they tackle the common challenges of global aging.