- Handbooks of Research on Public Policy series
Chapter 14: Population ageing and health care expenditure growth
The share of health care expenditure (HCE) in GDP has increased significantly over time. In the USA, it tripled in 50 years: from 5.2 per cent in 1950 to 15.4 per cent in 2000 (Hall and Jones, 2007). Other OECD countries display much lower HCE to GDP ratios than the USA, but, like the USA, their HCE to GDP ratios increase over time. In the 1997–2007 period, health spending grew substantially more quickly than GDP in almost all OECD countries (OECD, 2011). Population ageing is often seen as one of the main drivers of the increase in HCE to GDP ratios. That population ageing plays a role seems obvious: HCE per capita and chronological age are strongly positively correlated and the share of elderly is expected to increase considerably on account of population ageing. But does this argument really hold? Econometric analyses have found it difficult to ascribe a non-negligible role to demographic factors. Moreover, the time-to-death approach claims that HCE per capita relates more to remaining life expectancy than to chronological age. According to this approach, the correlation between HCE per capita and chronological age reflects the relationship between HCE per capita and remaining life expectancy, leaving little role for chronological age itself.
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