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Preparing for an aging population

By Michael Chen, Doris Lin 陳孝平, 林依瑩

Friday, Jan 16, 2004, Page 8

Taiwan's society is aging at an alarming speed. Solutions to the many problems that are to come exist in the resources hidden in "one unique characteristic," opportunities provided by "double windows" and a tripartite service-delivery system.

The so-called "one unique characteristic" refers to the fact that Taiwan is a society which is aging in moderate prosperity. It differs from European and American societies which became wealthy before they were aging. It is also different from developing countries such as China, whose societies are aging before they might become wealthy.

In societies that have experienced wealth before aging, a large portion of families have amassed considerable wealth so they consider it important to obtain care guarantees for their elderly either at their own expense or through private insurance.

In developing countries that are aging before they become wealthy, neither public nor private sectors are equipped financially to deal with the problems caused by an aging population. When a society starts aging, its economic vitality becomes inferior to that of young societies and sluggish economic growth reduces its opportunities to become well-off.

In such a society, an aging population will become a heavy public burden, forcing its people to bring down the cost by establishing large institutions so that, by virtue of economies of scale, they could manage to provide the elderly with the most basic care and medical needs.

The care quality and the goal of "aging in place" (remaining in one's current residence and neighborhood as long as possible) are therefore beyond their reach.

Taiwan cannot pride itself as a society that will experience wealth before aging. Given its economic development, however, it is also unlikely to become a destitute, aging society. Different modes are therefore required to resolve the aging problem.

"Double windows" refer to the demographic window -- a period in which a large group of working-age people is supporting relatively fewer older and younger dependents -- and the burden window -- the opportunity created as a result of successful cost containment in medical expenditures since the introduction of the national health insurance (NHI) program.

Although the proportion of people in Taiwan aged 65 or older surpassed 9 percent last year, the ratio in 2021 -- expected to stand at 15.85 percent -- will be roughly equal to the current levels in the UK, France, Germany and Japan. The problem must not be ignored, but we still have plenty of time to handle it.

In discussion of the aging pro-blem, the other end of the demographic structure is also worth our attention. Although the significant fall in Taiwan's fertility rate will bring serious problems in the long term, it will also allow some room for the government to formulate policies and plans in the near future because the dependency ratio -- the ratio of dependent young and elderly, aged below 14 and above 65, to the adult population -- decreases.

For example, the government should raise the overall savings rate at a reasonable margin to build an economic foundation and better prepare the nation for the real aging predicament in the future. It can also enact a public-pension program and consider a proper reserve rate to ease the burden in the future on the young.

The "burden window" refers to the fact that Taiwan's medical and welfare expenditures as a proportion of GDP are lower than other countries. In terms of medical care expenses, the overall medical spending merely accounts for 5.5 percent of GDP despite the establishment of the NHI system.

If we can make good use of the opportunity, desirable systems and service models can be introduced in the process of allowing medical and care expenditures to rise. This way, satisfactory services can be provided while future expenditure hikes will be contained.

This brings us to the concept of services provided by a tripartite-delivery system. Taiwan is not a "wealthy before aging" society and therefore the market cannot become the main provider of long-term care. Nor is it an "aging before wealthy" society, forced to provide collective care for the elderly.

Social forces have reached a certain level. Non-governmental and non-profit organizations are working in communities nationwide. If fully developed, non-governmental organizations will join hands with the government and the market to become tripartite-care forces.

The forces must be developed on the basis of "incubating" social capital, thereby developing the abundant social resources that are close to communities. In an elderly-care system with the third sector as its backbone, idle human resources that lack suitable channels to provide services can be mobilized. This way, the human resources can complement insufficient public means and, because of its nature of being close to communities, can fulfill the idea of "aging in place" promoted by the World Health Organization.

To implement this idea, individuals and organizations involved in community work should try to develop their organizations into a center for nurturing social capital and consider themselves social-resources developers.

The government should play its role well when formulating care policies for the elderly. The development of social forces should outweigh the exercise of direct and overall intervention with financial or administrative power. Otherwise, state coffers will be hollowed out and communities will be deprived of room for growth.

Michael Chen is president of the Chen Hsiu Luan Foundation for Education. Doris Lin is advisor to the Eden Foundation for Social Welfare.

Translated by Jackie Lin
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