Global events like climate change, immigration, and the opioid epidemic have the potential to affect mortality rates, that is, the rate at which people die. Mortality rates drive many factors that affect our everyday living, like pensions, healthcare, and taxes, as Milliman principal and consulting actuary Dale Hagstrom discusses in the latest episode of our Critical Point podcast.

Transcript

Announcer: This podcast is intended solely for educational purposes and presents information of a general nature. It is not intended to guide or determine any specific individual situation and persons should consult qualified professionals before taking specific action. The views expressed in this podcast are those of the speakers and not those of Milliman.

Lesley Pink: Welcome to Critical Point. I’m Lesley Pink, your host today. We’re talking about mortality, the rate at which people die. It sounds morbid, but mortality rate drives many factors that affect our everyday living, like pensions, healthcare, and taxes. Joining us today is Dale Hagstrom, who’s been researching mortality over the course of 40 years at Milliman. He’s here to talk about how global events like immigration and climate change affect mortality. Hi, Dale. Thanks for joining us.

Dale Hagstrom: Good morning.

Lesley Pink: Let’s talk about mortality improvement—two words that you don’t often hear together. What is mortality improvement?

Dale Hagstrom: I’ll speak for the life insurance side where I work most my time, and they very much root for mortality improvement.

Lesley Pink: I think we all do.

Dale Hagstrom: The concept is for a particular age, there’s a 10% chance of dying at this age, age 88, in a particular year, 2000. Perhaps by the time year 2010 rolls around, those same age, different people now, that were 10 years younger, but by time they reach that same age, 88, perhaps their mortality rate isn’t that 10% rate. Maybe it’s only 9.5%. There’s been an improvement for that age, different people, but the mortality table that you want to use has lower mortality rates. The improvement is that there’s less death.

Let me say it a slightly different way. Since I’m going to focus on the rate, what percentage of the people entering the year die, mortality improvement means that there’s a fewer number dying.

Lesley Pink: Fewer number dying.

Dale Hagstrom: So the number, the rate, goes down.

Lesley Pink: Okay. So how has that inched up in the U.S., for example? Has there been a significant jump in mortality improvement or does it go up and down?

Dale Hagstrom: If I went back most of a hundred years, mortality is actually improved by about two-thirds. Something that had been, might’ve been a 30% death rate, might be now down at a 10% death rate. But it tends to be a slow process. It certainly varies a bit from year to year, up and down a little bit. But the overall pattern has been a great deal of improvement cumulatively.

Lesley Pink: What are some of those factors, illnesses, that are bettering the mortality rate, if that’s, I think, how you would say that?

Dale Hagstrom: The things that have led to a great deal of improvement over the last hundred years— first and foremost early on were all kinds of public health measures. They had better water supplies, better sanitation, better conditions in terms of having fewer mosquitoes in most places, you know, screen windows. Just lots of public health stuff. Then they invented antibiotics, a little bit into the ‘30s, but by the 1940s they started becoming used, a little bit more widespread, and that helped a lot with mortality rates. The big effect was for relatively younger ages because their only real reason to die would’ve been those kind of communicable diseases. So you, when you beat those, you pretty much eliminate a lot of deaths at a lot of younger ages, young adult ages.

In 1964, the surgeon general published a report on how smoking was actually a deadly kind of habit that’s led to steady improvements in certainly lung cancer, certainly all kinds of heart attacks and stroke throughout the 50s and 60s and again, at ages where those deaths would otherwise have shown up. Age 50, age 60, age 70. So there’s been a steady improvement of mortality rates at those older ages, relatively older, than the young ones that were first affected by the more public health measures.

Clearly then there’s other things, good and bad changes in habit, some— more exercise for some, less exercise for others, living conditions for some, living conditions in a different direction for others. So those things have had a mixture. It’s worth recognizing, a lot of things you might think of that, “Oh, there’s people dying in a hurricane,” okay, and every one of those is a tragedy. But the thing to realize is the regular deaths in the U.S. are like two and three-quarter million a year. So if I have an extra hundred deaths from any particular cause that hits the newspaper, it may not change the overall statistics, and every year there’s blips.

Lesley Pink: Right.

Dale Hagstrom: Not all of them hit the newspaper, of course. So the overall total stays fairly steady and you look for the longer-term trends. Is it, in fact, getting better? Is it, in fact, getting worse? Clearly, the medical profession has done a lot of work, so the development of medical things has worked well on things like heart, which is stroke and heart attacks, because the anti-cholesterol and the lower blood pressure kind of medicines have a real influence there. And it’s really made a difference in mortality, and again, we’re talking about ages in the 40s, 50s, 60s, 70s. What’s been frustratingly slow is that cancer deaths haven’t really gone down any material amount. It’s still a second-leading cause of death, but the pattern of improvement on cancer’s really unfortunately rather flat. Not much improvement.

Lesley Pink: You talked about mortality improvement. What about things that are going in the other direction?

Dale Hagstrom: Yes. The biggest issue in an immediate fashion is obesity. There’s a lot higher diabetes prevalence that will eventually raise the mortality rate, so that’s going to raise diabetes earlier in life. Serious medical conditions and ultimately death earlier in life— that’s going to be a disimprovement. Another item, was just in general there’s higher deaths from a combination of accidents, suicide, criminal attack. That aspect of mortality, that cause of death, is tending to rise, and there’s obviously all kinds of theories, represented by political debate, on what’s a good thing and what would be a bad thing to try to deal with that. But the mortality rates are going up from that, but not the major cause of death, so the overall mortality rate hasn’t gone up much. A third one that has shown up in the statistics in the last handful of years is the opioid epidemic. And the addiction to opioids is a very deadly thing, and it’s shown up in the mortality statistics for the country in kind of middle ages, in economic groups that are a little bit disadvantaged but didn’t previously have particularly bad prospects for mortality are having higher mortality rates.

Lesley Pink: I was also wondering about terrorism and war-related deaths and how those affect the mortality improvement rate.

Dale Hagstrom: Terrorism is a risk of a very potentially big event. Luckily here in the U.S., we’ve had relatively few for, you know, 15 years. But when you combine it with another baseline set of deaths of two and three-quarter million, you’re not going to see necessarily large, overall effects on mortality tables, and even if it’s a one-time event like 9/11 here in New York, 17 years ago, it’s sort of a one-year event.

Lesley Pink: With climate change, are we seeing— is that having any effect or does it have the potential to have any effect?

Dale Hagstrom: Well, it certainly has a potential. It’s hard for me to say that there’s a material effect today. Obviously, there’s some people who will die in a hurricane, and in the past, there were probably greater deaths from hurricanes even though there might’ve been arguably fewer hurricanes. We’ve improved on our communication to let people know, “Hey, get off the beach,” give them two or three days’ warning. So climate change will have an effect and it will be a broad effect and a major effect. It will affect the ability to provide food. I mean, if the ocean rises a little bit and then with storms, a lot of things get flooded, even if they aren’t permanently flooded. There’s a whole lot of economic activity in the U.S. that’s centered on the coast. In the meantime, if the weather’s different, you can’t grow the same crops. That affects the price of food. All these things. There will be big effects and when you have a poorer economy, mortality goes up.

Lesley Pink: And I wanted to talk about, you’re talking specifically about the United States. What country has a mortality improvement rate strikingly similar to the U.S. and one that is strikingly dissimilar to the U.S.?

Dale Hagstrom: Clearly, other advanced economies, industrial economies like the U.S., have kind of broadly similar mortality. Clearly, you can look around, some other countries, Japan and Singapore and some other small ones where the population is more homogeneous, everyone’s sort of doing more of the same thing, the government’s sort of taking, has popular support for doing as much as they can because everyone’s kind of in the same mindset. They tend to have better life expectancy, lower mortality rates than in the U.S. The U.S. has a more disperse population geographically, more disperse in terms of socioeconomic groups, more disperse in terms of where they came from and what their cultural habits are.

Someone who’s a new immigrant to the U.S. has different expectations, different habits. It’s actually very interesting when you look at the U.S. statistics and try to see, “Okay, how would that apply someplace else?” Well, U.S. population has its biggest growth in the immigrant population. It’s much bigger than any other country, a much more fluid population. We have many more people from various Hispanic countries, many more people from Asia, and that is a noticeable fraction of our population. But in the U.S., these are voluntary immigrants. They’ve wanted to get here. They’ve had to go through various hurdles, but they’re partly by the government over the last 40 years or whatever. They had to have the hurdles of finding a job, finding a way to live, and they’ve had better mortality than the population that’s already here. They’ve self-selected to be healthier. They had the ability to move. Ambitious. Seeking education, seeking the kind of economic environment the U.S. offers.

So the Hispanic population in the U.S. has demonstrably lower mortality rates than the non-Hispanic population. Even if you just looked at, say, white, non-Hispanic versus Hispanic. They’re distinctly lower. Males are lower than the white males, non-Hispanic. The females are better than that. There’s at least three theories, and maybe they’re all true, you know, that immigration self-selects for healthier. Maybe the culture emphasizes a family structure in ways that’s taking care of people. Maybe their medical care is something different but better for them.

Lesley Pink: Mm-hm. Could be diet also.

Dale Hagstrom: It could be diet.

Lesley Pink: Diet could be.

Dale Hagstrom: Could be exercise, you know, who knows?

Lesley Pink: Right.

Dale Hagstrom: So it’s interesting. I can develop all kinds of theories about why that is, and similarly the Asian population that’s here from lots of different places in Asia. So I don’t want to say they’re all one big homogeneous group, but by and large, they tend to have probably some of the same influences affecting them. I’m not speaking to what their mortality rates are, but I’m going to believe they are lower mortality than the general U.S. population.

So when you start talking about mortality improvement, what I’m really saying is actuaries end up needing to look at a very detailed, well, for what particular group, what age, what sex, what country of origin, if that’s relevant, what economic class? If I’m pricing mortality for someone who’s buying a life insurance policy, the people who buy a $1 million face value policy are a different group of people from the people that buy $25,000, and they have different mortality.

Lesley Pink: On the note of non-Hispanic whites and Hispanic whites and differences within groups, women tend to live longer than men. Is men’s mortality improvement catching up to women’s or not at all? Or is there a trend?

Dale Hagstrom: Well, it kind of varies. From time to time, there’s certainly a period of time, that the men were catching up, and then there’s— then something will come along and the men go off and do stuff that isn’t quite as good and—

Lesley Pink: Like what?

Dale Hagstrom: Well, you know, they’re much more inclined to die from accidents, they’re much more inclined to die from violence, they’re much more inclined to die from suicide, because they use effective means. There’s no second thoughts. If you shoot yourself in the head with a gun, that’s it. If you try to take sleeping pills, yeah, you might get saved, and men and women tend to take different means for suicide, for example. Men die more from drugs. Men even today do more smoking than women. Men are more risk takers. Not every man. But yeah, the women have lower mortality rates than men as a general rule. That wasn’t true a hundred years ago.

Lesley Pink: What changed?

Dale Hagstrom: Women stopped dying in childbirth. So much. Not that it doesn’t still happen. But it used to be, if you went back the previous few thousand years, men were the dominant group in the tribe because they’re the elders, and the women didn’t live to be elders.

Lesley Pink: Right.

Dale Hagstrom: But that’s not been true for a hundred years and maybe longer.

Lesley Pink: With the mortality rate improving, what effect does that have on other aspects of life? For example, retirement issues, healthcare?

Dale Hagstrom: It’s a very important aspect. As a life insurance person, I’ll see people, living longer, and that’s all great, that life insurers can offer less expensive products. On the other side, where there’s pensions involved or whether it’s a program to provide medical care after you retire or a pension after you retire or long-term care, those costs are rising, have risen already quite a lot and will have every, a hundred reasons, why they’ll get much more expensive over time, and having a handle on that, having the ability to forecast it and hopefully then make changes in ways that makes it affordable for everyone, depends on having good information, good projections, realistic understanding of how much mortality improvement should we anticipate, and how many people will reach that age 80, age 90, age 100, age 110, age 120.

Lesley Pink: Is 120 possible, you think, in the future?

Dale Hagstrom: People already— some few have— already have lived that long. A few. There’s a very interesting debate going about how to think about what can happen way out there. Currently, I go with the theory there’s kind of a limiting age out there that’s something like 120. If you cured every disease known to man, but then at some point the body just falls apart because everything’s outlived its ability to regenerate, then you kind of fall off a cliff. It’s actually a wonderful scenario. You’re healthy until the day you drop dead. But if you could stay healthy until you then just ran out of steam, everybody’d say, “Yeah, yeah, I want to live to a hundred.” But that will be expensive if you’re not healthy for the people who are providing medical care or people providing long-term custodial care. But if you’re healthy, that’s okay, that’s affordable then. On the other hand, people promise you a monthly income pension. You know, your final salary for as long as you live and you live to 120, after retiring at 60, that’s a long pension payment.

Dale Hagstrom: And people who have that liability want to understand just how much money they should be saving up. I, as a life insurance actuary, it’s like, “Yeah, go for it. Live forever.”

Lesley Pink: Thanks for joining us, Dale. You’ve been listening to Critical Point, presented by Milliman. To listen to other episodes of our podcast, please visit us at milliman.com or find us on iTunes, Google Play, Spotify, and Stitcher. See you next time.