Budgetary Costs of an Ageing Population: The Case of Health Care in Portugal

Abstract

In the follow-up to the Stockholm European Council in March 2001, the ECOFIN requested a report on the impact that projected population ageing will have on public spending on health and long-term care. This paper provides an answer for the Portuguese case, focusing on health care alone. All public health care outlays are considered. Profiles of real per capita health care costs by age and gender have been estimated and cover acute care, ambulatory care, and pharmaceuticals. With real per capita costs growing with GDP per capita or per worker, demographic changes are assumed to be the only driver of increasing health care expenditure. As a result of ageing alone, public spending on health care in Portugal is expected to rise from 5.3 per cent of GDP in 2000 to between 6.4 and 7.2 per cent of GDP by 2050. These numbers are, in effect, lower bounds, given that other supply and demand factors that were not explicitly considered could increase expenditure further.