Key messages
• Per person health expenditures are generally higher among older people than younger people – particularly in developed health systems. As such, policy-makers often assume that population ageing will result in unconstrained growth in health spending.
• However, by applying data on public health expenditure patterns by age from European Union (EU) countries to population projections for both the EU and Japan, we find that health spending growth attributable to population ageing will be marginal through 2060, adding less than 1 percentage point per year to per person annual growth.
• Applying the same public health expenditure by age data to population projections for Indonesia, we estimate the costs of "scaling-up" a health system to meet the care needs of an ageing population. We find that this too can be modest, especially if investments are made before a large share of the population is at older ages, and if scaling-up is spread out over time.
• In recognition that future expenditure patterns may vary due to a number of other factors that relate to changes in the age-mix, we develop a series of hypothetical scenarios where per person health expenditures are even higher for older people compared with their younger counterparts than the most recent EU health expenditure data suggest.
• However, even in the most "extreme" hypothetical scenario presented here, designed to be consistent with an increase in the volume, price, intensity and coverage of services for older people under the public health budget, population ageing only increases the overall EU health spending share of GDP in 2060 by 0.85 more percentage points than it would according to projections based on current expenditure by age patterns; 1.00 more percentage point for Japan; and 1.67 percentage points more for Indonesia, assuming that health spending is scaled-up to reach the EU average over 15 years.
• Taken together, these findings suggest that population ageing is not, and will not become, a major driver of growth in health expenditures.
• Policy choices still play an important role in determining the ways in which health spending trends will materialize. Such choices determine how health services are delivered, the prices paid for goods and services, and how coverage decisions are made. While ageing will not become the main driver of health expenditure growth, effective policy options can be implemented to moderate the growth in health expenditures as populations age.