Could a new silver bond finance cross-cutting local projects that are needed to help communities build and scale age-friendly initiatives?
Blue bonds, green bonds…
The World Bank has recently financed a ‘Blue Bond‘ that aims to fund improvements in fisheries. It’s an evolution of a green bond, and is described as “an innovative financial instrument used to raise capital from financial market investors for projects that support the sustainable use of ocean resources”.
These innovative financing vehicles provided by multinational organizations with global mandates are useful for the oceans, or climate-related projects, as a large number of players need to be involved, and the returns are a blend of financial and non-financial impacts.
These vehicles are still early – the Seychelles one is just $15m. According to Bloomberg, there are a total of $580bn of green bonds globally. – not chump change but around half a percent of the total bonds market.
What would a silver bond do?
A silver bond would be issued by a local government to invest in activities focused on local priorities that have had metrics assigned to them (e.g. reduce the hospital utilzation rate, keep people with dementia at home longer, reduce depression etc). Though it’s called silver I would suggest that show its benefits apply to all ages, including older people, is probably the best course.
Ideally, it would tackle the challenges inherent in funding today’s local healthy ageing activites, which include:
- Towns don’t control health budgets. Often the main health funding comes from the provincial / state rather than the municipality, removing some of the pain point locally. Initiatives like devolution of health and social care budgets to the municipal level (e.g. Greater Manchester in UK) could help, but most likely only for the larger towns. Cities need more dedicated funding for these projects.
- Current health funding incentives are backwards. In most parts of the world, even enlightended Northern Europe, the ‘medical industrial complex’ benefits more the sicker you are. While there is strong movemet in the US towards value-based care it has so far mostly been around individual interventions (bundled payments) rather than from a population health perspective ( PACE programs being one exception). A new funding vehicle that aligns incentives around wellness rather than more sickcare woudl be welcome.
- Market is fragmented locally. The service providers and the populations they serve are fragmented, meaning it’s hard to get a clear picture of what is needed or who has been providing what services to whom. A joined up ‘health data backbone’ is likely the answer here, with the city managing a data trust accesssible to multiple providers. In order to deliver community wide metrics and reward outcomes, we’ll need a decent data model, but we can’t afford to have that owned by one player, whether it’s a government department or a tech company.
- Limited agreement on what to measure. This goes back to the question of ‘what is healthy ageing?’. Measuring it by adding another 5 years of extra healthy living, as they’re doing in the UK, is all very well, but not immediate enough to course correct. Proxies such as the components of healthy ageing – self reported happiness index, steps, social activity, hospital and primary care admissions – will probably be the targets in the short run.
A silver bond could be opened to finance the development of local programs that aim to improve local metrics of healthy ageing, align the fragmented stakeholders, incentivize collaboration and joint problem solving and give power to the local town / city to more directly address the challenges of healthy ageing.
