Prosperity and welfare of the elderly

Many countries are on the threshold of a major demographic shift: an aging population. This is often associated with a higher pressure on the collective budget, mainly due to a higher demand for medical and long-term care. However, economic studies show that the ageing population probably will have a marginal impact on rising health care expenditures, when compared to medical innovations, increasing inefficiency of labour in the health care sector, and restructuring of the health care market. In addition, the rise in health care expenditures due to aging will possibly be moderated by other developments. This is the subject of the PhD thesis Population ageing and health care expenditure by Herbert Rolden, which he will publicly defend on Tuesday February 2nd in Leiden.
Rolden describes that population aging can roughly be divided into three dynamics: a higher life expectancy, a growing proportion of older persons and a higher average mortality risk in the overall population.

Life expectancy
Life expectancy has risen consistently in many countries throughout the last centuries, mainly due to rising prosperity and better care, nutrition and hygiene. Whether this rise in life expectancy will cause an increase in health care expenditure depends on the development of ‘healthy life expectancy’. If healthy life expectancy rises in a parallel fashion to life expectancy, then the ‘expensive years’ of old age will be postponed rather than expanded.

Number of older persons
As health care expenditure rises with age in each individual, a larger share of older people will increase the total level of health care expenditure. However, there are several developments that can moderate the impact of a larger share of older persons on health care expenditures. An example: As women live longer than men, there are more widows than widowers. However, the number of widows in the future will likely decrease because the life expectancy of men is rising faster than that of women, in turn reducing the pressure on long-term care.

Mortality risk
The individual level of health care expenditure peaks in the months before death. These ‘cost of dying’ make up a large share in the total level of health care expenditure. Since the cost of dying decreases with age, an increasing overall mortality risk in the population can partly be offset by another component of population ageing: increasing life expectancy.

The promotion of Herbert Rolden took place on Tuesday, 2 February 2016 in Leiden. Supervisors were Prof. Dr. Rudi Westendorp (Copenhagen University) and Dr. David van Bodegom (Leyden Academy).