Abstract
Our study estimates potential fiscal savings from increased physical activity among older people. This is the first study directly assessing the possible impact of higher physical activity on long-term fiscal sustainability. The study focuses on Poland, where ageing costs are mostly associated with an increase in public spending on healthcare and long-term care. Our results suggest that physical activity has the potential to significantly decrease healthcare and long-term care expenditures. Converting these results into long-term fiscal sustainability, we calculate the S2 indicator, used by the European Commission for the assessment of fiscal sustainability in the long horizon. The long-term component of the indicator, related to ageing costs, is lower by almost 0.7 in comparison with the baseline case, 0.5 of which can be attributed to the reduction in long-term care and 0.2 to the reduction in healthcare. Our results confirm that increased physical activity among older people may lead to a reduction in expenditures related to population ageing and may significantly improve long-term fiscal sustainability.
Highlights
Long-term fiscal sustainability depends substantially on demographic factors
An ageing population translates into future higher pension expenditures and increased demand for healthcare (HC) and longterm care (LTC)
The results suggest that a higher level of physical activity leads to lower HC and LTC costs
Summary
Long-term fiscal sustainability depends substantially on demographic factors. In order to assess a government’s long-term fiscal situation, its current fiscal position and ability to finance budgetary needs and service debt must be analysed and future additional costs related to demographic changes need to be assessed. An ageing population translates into future higher pension expenditures and increased demand for healthcare (HC) and longterm care (LTC). As the need to provide more health and long-term care materialises, it will significantly increase governments’ financing needs. In European countries, ageing populations create significant fiscal risk. According to the latest Fiscal Sustainability Report of the European Commission (EC, 2019), age-related expenditures in the European Union will increase by 1.7 per cent of GDP between 2016 and 2070. The most significant projected costs in ageing-related expenditures are LTC and HC. Governments seeking to reduce the budgetary burden arising from demographic changes should focus on factors and policies to improve the functional ability and health of older people
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