The impact of ageing, socio-economic differences and the evolution of morbidity on future health expenditure - a dynamic microsimulation

Abstract

Background: Population ageing is associated with rising healthcare expenditure. To inform policy and adapt health systems accordingly, a detailed quantitative analysis of the different components of ageing and other factors that influence cost dynamics is needed.

Methods: We use dynamic microsimulation to project healthcare expenditure in Austria and disentangle the effects of changes in longevity, population age-structure, healthy life years and socio-economic health disparities. By combining price weights for healthcare services with information on healthcare consumption from the Austrian Health Interview Survey, we construct average cost profiles by gender, age, and education. These profiles, aligned with the System of Health Accounts, are integrated into the microDEMS model, along with official population projections, to estimate expenditure scenarios until 2060. We examine the relationship between rising life expectancy and changes in healthy life years and assess the potential impact of closing the gap in costs currently observed between education groups. Total and per-capita cost trajectories are derived and evaluated against two indicators for the size of the labor force to assess economic implications.

Results: In all scenarios, demographic ageing increases the financial burden on the economically active population, even with morbidity compression. Nearly two-thirds of the projected cost increase stems from declining mortality, while one-third results from age-structure changes. Per-capita costs rise by 26% under a morbidity expansion scenario but could decrease by 5% if lower mortality is accompanied by an extension of healthy life years and a reduction in socio-economic health disparities. In economic terms, costs per working-age person increase by 12% to 48%, depending on the scenario. When adjusting for labor force expansion and the associated economic benefits, the increase ranges between 5% and 39%.

Conclusions: Rising healthcare expenditure poses a major challenge in an ageing society. However, policies that extend healthy life years and reduce socio-economic disparities offer viable strategies to significantly mitigate the economic impact of ageing.

Keywords: Ageing; Healthcare expenditure; Microsimulation; Projections.

Fig. 1

Total Health care expenditure (HCE_tot) Notes/Source: Projections of future healthcare cost expenditure by scenario (Table 1) based on microDEMS. Relative change to 2020. Left panel shows scenarios S0 to S4, right panel shows scenarios S5 and S6 in comparison to S0 and S1

Fig. 2

Health care expenditure per capita (HCE_pc) Notes/Source: Projections of future per capita healthcare cost expenditure by scenario (Table 1) based on microDEMS. Relative change to 2020. Left panel shows scenarios S0 to S4, right panel shows scenarios S5 and S6 in comparison to S0 and S1

Fig. 3

Health care expenditure divided by working age population (20–64) (DEP_pop) Notes/Source: Projections of future healthcare cost expenditure per working age population by scenario (Table 1) based on microDEMS. Relative change to 2020. Left panel shows scenarios S0 to S4, right panel shows scenarios S5 and S6 in comparison to S0 and S1

Fig. 4

Health care expenditure per active person (DEP_lfs) Notes/Source: Projections of future healthcare cost expenditure per active person by scenario (Table 1) based on microDEMS. Relative change to 2020. Left panel shows scenarios S0 to S4, right panel shows scenarios S5 and S6 in comparison to S0 and S1

Fig. 5

Age profile of healthcare expenditure by gender and education. Source: Horvath et al. [31]. On average, the expenditure levels correspond to official statistics for healthcare spending covering inpatient, outpatient and daycare services, provided by Statistics Austria by gender and age (in 5-year groups) following the System of Health Accounts (SHA) classification. 2019 prices

Fig. 6

Health care expenditure by type of healthcare service, absolute values (bn €). Notes/Source: Projections of future healthcare cost expenditure by type of healthcare service, based on microDEMS Left panel shows scenarios S1, right panel shows scenarios S2. In billion Euro, 2019 prices

Fig. 7

Health care expenditure by type of healthcare service, relative change (2020=1). Notes/Source: Projections of future healthcare cost expenditure by type of healthcare service, based on microDEMS Left panel shows scenarios S1, right panel shows scenarios S2. Index 2020=1