Over the past twenty years, there has been a significant shift in global demographics, as age-related and long-term chronic conditions have become the most significant challenge for the healthcare systems.
Structural trends such as the ageing of the population, changes in lifestyle and living conditions, the increase in the diffusion of mental health problems that can lead to significantly poorer health outcomes and reduced quality of life, have created the preconditions for an increase in the diffusion of chronic diseases. Additionally, medical technologies for the diagnosis and treatment continue to advance in sophistication and cost, and this will probably put an even greater financial burden on consumers.
A good portrait of this scenario is provided by the report “What Level of Long-Term Services and Supports Do Retirees Need?”, published by the Center for Retirement Research at Boston College. Based on two decades of data from the Health and Retirement Study, the analysis classifies the severity of care needs.
The results show that one-fifth of 65-year-olds will die without ever requiring substantial long-term care, while about one-quarter will have severe needs. Regarding the rest of the retirees, 22% will experience minimal needs and 38% will experience moderate needs. Then, the report also shows that the demographic patterns are as you would expect: married and highly educated individuals, whites, and those who report excellent health will need relatively little in terms of support, while single individuals, those without a high school diploma, Blacks and Hispanics, and those who report poor health will need a lot of support.
This is a highly complex scenario, in front of which governments and institutions are discussing in order to understand what action to take, starting with pension system reforms. For instance, thinking of the European Union and its post-covid Recovery Plan, pension spending is now at the top of the agenda, as the EU Commission requested governments to invest in the implementation of reforms capable of reducing the enormous costs of pensions, to promote growth through public and social investments.
Thinking of the role that the insurance industry can play to meet the new health care needs resulting from an ageing population, the Geneva Association recently published an insightful report titled “New Care Models: How insurers can rise to the challenge of older and sicker societies”. As per its title, the study suggests the adoption of the so-called New Care Models (NCMs) – an approach to care delivery that aims to both improve consumer experiences and health outcomes, while also cutting costs.
New Care Models employ a variety of approaches that emphasize disease prevention and health promotion, proactive management of people with chronic disease, the improvement the consumer experiences, and collaboration across health and social care disciplines. This involves multi-professional partnerships to coordinate care for people with physical and mental health needs, community-based or home-based alternatives, or the institutionalization in hospitals or residential homes.
In this model, insurers would have a role, based on three different suggestions:
1 – “Enhance the value proposition of NCMs”. Insurers need to go beyond the simple ideas of choice and convenience, in order to promote their value to consumers, distributors, and providers.
2 – “Assume the role of a strategic payer”. Insurers need to become a strategic orchestrator of services, ensuring a favourable supply-side condition that can deliver on the promise of New Care Models made to policyholders.
3 – “Create a cradle-to-grave joint health-life proposition”. As both life and health insurance solutions seek to expand by becoming attractive to new market segments, insurers should identify the strategic touchpoints of the two lines of business.