The gradual ageing of the population in developed countries is a reality that is posing major challenges, unknown to date, related to the sustainability of public finances, in areas as varied as pensions, health spending and long-term care, that require timely decision-making to ensure the viability of public accounts in the future. Within this framework, health economics has analysed for years the effect of population ageing on health systems and their use, where abundant empirical research has been generated. The growing trend over the last few decades in both health expenditure and the number of elderly people has led to search for the relationship between the two.
As said before, there has been a significant increase in public health expenditure in developed countries in recent years. In Spain, measured in relative terms, public health spending grew by 84.7% between 2002 and 2018. Measured in per capita terms, Spanish public health expenditure in 2018 reached 1,523 euros, the highest figure in the last decade, when in 2002 it was 921 euros. In relation to GDP, public health expenditure in Spain in 2018 was 5.9% of GDP, being 5.1% in 2002.
Developed countries are also undergoing a rapid process of population ageing. The Spanish population over 65 years of age accounted for 19.26% of the total population in 2019; only 20 years earlier, this proportion was 16.76%. The number of elderly people has risen from 6.7 million to 9 million in that period. The "ageing of ageing" is also a fact: people over 75 years of age accounted for 49.5% of the total elderly population in Spain in 2019 (in 1999 they were 42.2%), with an increase of 1.6 million people in that period. This trend, far from stagnating, looks set to continue to increase in the coming years in developed countries and many developing countries, due to an increase in life expectancy and a decrease in fertility rates, with important macroeconomic implications, including health spending1.
These circumstances essentially pose a problem for the sustainability of public health and long-term care systems. In this area of analysis, part of the empirical research has focused its efforts on finding out how the progressive increase in the elderly population affects the increase in healthcare and long-term care expenditure, since it is to be expected, at least from a theoretical point of view, that an increase in the elderly population, due to gains in longevity and the increase in associated health and dependency problems, such as disability, the presence of chronic diseases and polymorbidity, will generate significant increases in public health spending, which in turn will cause significant strains on public finances.
In this context, the analysis of the effect of the elderly population on the consumption of health resources and health expenditure constitutes an important area of analysis, given the unstoppable demographic trend towards ageing populations in developed countries.
Spain has a public, universal and free Beveridge-type health system, with funding from public budgets. Administratively, Spain is divided into 17 Autonomous Communities, with a high degree of decentralisation, where each is directly responsible for both the expenditure and the management of the health systems in its region. The Ministry of Health establishes a basic portfolio of common services for all the Autonomous Communities; but each of them has the power to set additional services in its portfolio, as well as to choose the organisational model that they consider most appropriate, always within the limits set under the laws of the Spanish state. 99.1% of the Spanish population has free public health coverage. The Spanish healthcare system does not have any type of co-payment for acute or chronic healthcare, if presenting a co-payment for non-hospital pharmaceutical consumption, which in the case of the elderly is very limited (in 2017, the maximum total monthly co-payment for elderly pensioners ranged from 8.23 euros to 18.52 euros depending on income, except for incomes above 100,000 euros per year, rare in Spain, whose limit was 61.75 euros. In addition, there are total exemptions for certain cases, such as dependency cases or the receipt of non-contributory pensions).
This study aims to analyse the effect that aging may have on the use of acute care services. A second objective is to determine whether aging may have interaction with medical technology growth, which has often identified as the main driver of increased healthcare spending (Dormont et al, 2004; Goldman, 2005; Suen 2005).
Conceptual framework
The analysis of the effect of aged on public health expenditure in this paper is based on the model proposed by Meijer et al (2013) developed from Andersen and Newman (1973), which incorporates other determinants of health expenditure, identified as societal determinants, into the original model, focused on the consumption of health resources, so that we move from a model of consumption of health resources to a model of health expenditure.
In this model, the determinants of healthcare services use and health expenditure depend on individual factors and social factors. Individual factors are further divided into three groups: predisposing factors, which are those that reflect the predisposition to use health services, including gender, living and working conditions, health behaviour, co-residence status, socio-economic status and the main independent variable in this study, age.
The presence of age as a predisposing factor is essential in the analysis, because it indicates that age by itself is not necessarily a determinant in the consumption of health resources and may be relevant to the extent that it is related to the determinants of the second subgroup, the need factors, which indicate the reasons why an individual, given all other factors, makes use of health services. The main ones are health status, disability and mortality. Indeed, there is abundant empirical evidence that the effect of age on health care expenditure underlies the presence of chronicity or dependency conditions, as well as poor health status (Lopreite and Mauro, 2017; Kinge et al, 2015; Smith et al, 2013; Ghislandi et al, 2014).
The third subgroup, called enabling factors, is the group of resources available to meet the need for health resources consumption. These include the availability of informal care, which is mainly influential in the consumption of long-term services, personal or family income, and the presence of health insurance.
The social factors identified as determinants of increased health spending are national income, technology, health policy and healthcare system, prices and wages. Although national income is shown as a factor strongly related to the increase in health spending, when income is analysed at the individual level, the impact is much more limited (Van Doorslaer et al, 2004; Getzen, 2000), an issue that can be explained by the presence of collective health insurance for Bismark-type health systems or, as in Spain, the presence of a Beverdige-type public health system with universal coverage.
As we previously pointed out, medical technology progress is often mentioned as the most important driver of increased health care expenditure, mainly in acute care (Newhouse 1992; Weisbrod 1991), essentially related to a significant increase in use (Bodenheimer, 2005). The evidence further shows that medical technology interacts strongly with age and health, i.e., population aging reinforces the influence of medical technology on health expenditure growth and vice versa. The present study delves into the relationship between ageing and health technology use to determine whether there is an interaction between both.
Prices and wages are the other two drivers identified by the model. As healthcare systems are labour-intensive, healthcare labour costs may be influenced by the so-called Baumol's cost disease (Baumol 1967), and there is a large literature on this effect in the healthcare sector (Hartwig 2008; Navarro 2019).
1 Promoting Healthy Ageing. OECD. 2019.