Studies of Health and Long-Term Care Expenditure Growth in Aging Populations

In recent decades, elderly populations in most developed countries have increased considerably, both in absolute and relative terms. This growth of the elderly share of the population is mainly attributable to two demographic transitions: the (simultaneous) increase in longevity and decrease in fertility. Additionally, for some European countries a third cause of population aging can be distinguished: the aging of the baby boom generation. The extent to which this third demographic transition contributes to population aging largely depends on the country under consideration. In the Netherlands, the baby boom was larger and lasted for a longer time. The aging of the Dutch population is therefore expected to reach its peak at 2040, later than other western countries. The Dutch population aged 65 and older increased from 770,500 in 1950 to 2,538,300 in 2010 which amounts to an increase of 329 percent. In relative terms, the proportion of the population aged 65 and above doubled, from 7.6 percent to 15.3 percent. However, population aging not only reflects an increasing share of the 65+ population, but also changes in the age distribution within this elderly cohort. The share of the very old has also gradually increased; the population aged 80 and above comprised 12.9 percent of the 65+ population in 1950, but 25.5 in 2010, and is expected to continue to rise to 33.3 in 2040 (Statistics Netherlands, 2011). As the first baby boomers have reached the age of 65 in 2010, population aging will accelerate the coming three decades. Population aging will definitely have a large impact on society in general and on social security systems in particular. It challenges the financial sustainability of current pension and health care systems. The extent to which population aging threatens this modern welfare state largely depends on the underlying trend in ill-health, e.g. whether it is accompanied by a compression or expansion of ill-health (Fries, 1980; Olshansky et al., 1991). A compression of ill-health is likely to alleviate the societal consequences of population aging. It will not only have enormous benefits for population health, but may help increasing the labor force participation among the elderly and to reduce health care expenditures (HCE). The objectives of this thesis are restricted to improved understanding of the relative impact of population aging on the level of HCE.

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