Expenditure on medical treatment has tended to rise as a proportion of national income throughout the European Union. There has been an element of uplift to the mean as countries with low proportions of spending, such as the United Kingdom, have faced political pressure to approach the average EU proportion of their national income on the provision of health services, medical treatment and long-term care. A particular concern is that, with an ageing population and therefore the prospect of more old people around, the pressures for expenditure on health care will increase further. This issue is of concern both in its own terms and because of its fiscal implications. Rising health expenditures put pressure on the targets of the Stability and Growth Pact. They also raise the question whether budgetary targets should be tightened ahead of projected growth in public expenditures, so as to "save up" for future spending and keep expected future tax rates reasonably constant. In this programme of work we will refine existing estimates of the links between reported states of health and use of medical services. As well as looking at the effects of ageing on health care we will take account of the link between health expenditure and fertility rates and the demands on health services made by non-native populations. We will pay particular attention to costs of care near death. A study will be made of factors other than demand (such as methods of financial control) which may influence health spending. An important aspect of our research is that we will carry out our work so as to be able to provide not only the familiar projections and scenarios but also standard deviations and confidence limits for predictions of key variables such as healthy life expectancy and demand-driven expenditure levels. These will allow policy-makers to judge not only possible outcomes but also the risks surrounding them and to assess their implications.
Keywords:
Health, ageing, health expenditure, financial sustainability
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