Improved life expectancy in Europe is a triumph for public health and health services. But it has also led to large changes in the age structure of populations. This has raised concerns about the smaller proportion of the populations that will be working, possible effects on economic growth, the affordability of pensions and the costs of and provision of health and social care (Cylus et al., 2019a).
The benefits of health promotion
While ageing does bring challenges, more careful analysis suggests that, with suitable policies, countries will be able to cope. Fortunately at the population level, ageing – that is, the change in the age mix of the population – is a slow process, and we have time to plan. There are tools (e.g., the European Observatory on Health Systems and Policies’ PASH simulator) that allow countries to project future health care spending and the revenues needed to pay for care needs, and which allow one to explore the effects of different policies (European Observatory on Health Systems and Policies, 2022; Cylus et al., 2022). The PASH simulator has been used to support policy debates in Europe as well as outside the region (Normand et al., 2022).
Although the evidence on whether people are ageing in better or worse health than they have in previous generations is mixed, there is good evidence that we can improve health and independence in people of all ages (Rechel et al., 2020). Health promotion has been shown to be cost-effective in reducing needs and costs of care, and policies that help people to remain active can improve health. Life expectancy has been rising for all, but has been particularly rapid in men, meaning that the proportion of older people living as couples has increased. Two person households tend to be more viable and to need less care.
Unlocking resources
A frequently expressed concern is that there will be fewer workers and more people who are not working (Avendano and Cylus, 2019). This has implications for the economy as well as public finances and potentially the health system, if it is funded largely through social contributions linked to the labour market (Cylus et al., 2019b). Indicators such as the old-age support ratio can be very misleading. Projections suggest that while the numbers over 65 will increase in most countries, the proportion of the adult population with disabilities will remain fairly steady. Healthy older people can be very productive in both paid and unpaid work. Earlier evidence suggested that older workers are usually less productive, but this may no longer be the case as the need for physical strength has reduced. While some people are keen to retire, and those who continue to work in unfulfilling jobs tend to have worse health, those whose jobs are fulfilling remain productive, gain benefit from continuing to work and seem to enjoy better health. This suggests that better design of roles for older workers can unlock a useful resource.
Many older people contribute significantly as volunteers, doing unpaid work. They are a key resource to care for grandchildren allowing adult children to remain in the workforce. They are the largest source of unpaid caring for other older people and take on important roles in support of formal provision of health and long-term care.
Healthcare costs
Another concern is the seemingly inevitable rise in future healthcare costs. This is neither inevitable nor unmanageable (Williams et al., 2019). It is something of a myth that ageing leads to increased costs. Rising expectation at all ages, increased availability of effective interventions and policy choices are all more important. Evidence shows that the apparent high costs of caring for older people is really the high costs of end-of-life care, and we each die only once (Normand et al., 2021). High end-of-life costs are incurred for a very small proportion of decedents. Studies have shown that careful assessment of needs and support for better choices improve the experience at the end of life and can reduce costs. Also, end of life costs are lower in older decedents, so the shift to people dying at older ages should lead to lower end of life costs. Countries may choose to spend more on healthcare, but ageing will, at most, play a small part.
What is clear is that there is likely to be a large (proportionate) rise in the costs of long-term care. These have been shown to increase with age. However, the current share of GDP on long term care is low, so the high proportionate increase represents a modest absolute increase. It should also be possible in many countries to provide more efficient long-term care, with more rehabilitation, more support for independent living, and less dependence on institutional care.
An economic lens
Despite the common view of ageing as a demographic timebomb, the evidence suggests a more complex story (Greer et al., 2022). Applying an economic lens to population ageing reveals some challenges, but also some opportunities. In many cases older people are a resource and not a cost, and with the right policies can contribute in both paid and unpaid work. To some extent this can reduce the effect on the workforce. Any increases in ageing related costs of care will be slow, and modest enough to be manageable.
- Avendano M, Cylus J. 2019. Working at Older Ages: Why it’s important, how it affects health, and the policy options to support health capacity for work. The economics of healthy and active ageing series. Copenhagen (Denmark): World Health Organization 2019 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). Available at: https://eurohealthobservatory.who.int/publications/i/working-at-older-ages-why-it-s-important-how-it-affects-health-and-the-policy-options-to-support-health-capacity-for-work-study
- Cylus J, Figueras J, Normand C. 2019a. Will population ageing spell the end of the welfare state? A review of evidence and policy options. The economics of healthy and active ageing series. Copenhagen (Denmark): World Health Organization 2019 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). Available at: https://eurohealthobservatory.who.int/publications/i/will-population-ageing-spell-the-end-of-the-welfare-state-a-review-of-evidence-and-policy-options-study
- Cylus J, Roubal T, Ong P, Barber S. 2019b. Sustainable health financing with an ageing population: Implications of different revenue raising mechanisms and policy options. The economics of healthy and active ageing series. Copenhagen (Denmark): World Health Organization 2019 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). Available at: https://eurohealthobservatory.who.int/publications/i/sustainable-health-financing-with-an-ageing-population-implications-of-different-revenue-raising-mechanisms-and-policy-options-study
- Cylus J, Williams GA, Carrino L, Roubal T, Barber S. 2022. Population ageing and health financing: A method for forecasting two sides of the same coin. Health Policy 126(12): 1226-1232. https://doi.org/10.1016/j.healthpol.2022.10.004
- European Observatory on Health Systems and Policies. 2022. PASH (Population Ageing financial Sustainability gap for Health systems) Simulator. Available at: https://eurohealthobservatory.who.int/themes/observatory-programmes/health-and-economy/population-ageing-financial-sustainability-gap-for-health-systems-simulator
- Greer SL, Lynch J, Reeves A, Falkenbach M, Gingrich J, Cylus J, Bambra C. Ageing and health: the politics of better ageing. Figueras J, McKee M, Mossialos M, Busse R (eds.) Cambridge: Cambridge University Press. Available at: https://eurohealthobservatory.who.int/publications/m/ageing-and-health-the-politics-of-better-policies
- Normand C, Williams GA, Cylus J. 2022. The implications of population ageing for health financing in the Western Pacific Region: Exploring future scenarios and policy options for selected countries using the PASH Simulator. The economics of healthy and active ageing series New evidence for the Western Pacific Region. World Health Organization 2022 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). Available at: https://eurohealthobservatory.who.int/publications/i/the-implications-of-population-ageing-for-health-financing-in-the-western-pacific-region-exploring-future-scenarios-and-policy-options-for-selected-countries-using-the-pash-simulator
- Normand C, May P, Johnston B, Cylus J. 2021. Health and social care near the end of life: can policies reduce costs and improve outcomes? The economics of healthy and active ageing series. Copenhagen (Denmark): World Health Organization 2021 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). Available at: https://eurohealthobservatory.who.int/publications/i/health-and-social-care-near-the-end-of-life-can-policies-reduce-costs-and-improve-outcomes
- Rechel B, Jagger C, McKee M. 2020. Living longer, but in better or worse health? The economics of healthy and active ageing series. World Health Organization 2019 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). 2020. Available at: https://eurohealthobservatory.who.int/publications/i/living-longer-but-in-better-or-worse-health
- Williams G, Cylus J, Roubal T, Ong P, Barber S. 2019. Sustainable health financing with an ageing population: will population ageing lead to uncontrolled health expenditure growth? The economics of healthy and active ageing series. Copenhagen (Denmark): World Health Organization 2019 (acting as the host organization for, and secretariat of, the European Observatory on Health Systems and Policies). Available at: https://eurohealthobservatory.who.int/publications/i/sustainable-health-financing-with-an-ageing-population-will-population-ageing-lead-to-uncontrolled-health-expenditure-growth
Charles Normand
Charles Normand is Professor of Economics of Palliative Care and Rehabilitation at the Cicely Saunders Institute at King’s College London, Professor Emeritus at Trinity College Dublin and honorary Professor in Health Economics at the London School of Hygiene and Tropical Medicine. His main current research interests are on health care finance and the economics of ageing and palliative and end of life care. He has worked on a range of studies on economic and health economic aspects of ageing in Ireland. He has collaborated for many years with WHO and with the European Observatory on Health Systems and Policies and is currently co-leading a programme of work on population ageing and the impact on health and social care. He recently co-authored the Observatory’s policy brief on end of life care and the forthcoming brief on ageing and health care finance for the Western Pacific Regional Office.
Gemma Williams
Gemma is a member of the Observatory’s London hub and is based at the London School of Economics and Political Science.
She conducts comparative health systems research, focusing primarily on the health workforce, health financing policy, health inequalities, healthy ageing, digital health and migration and health.
Jonathan Cylus
Jon Cylus is the head of the Observatory’s London Hubs based at both the London School of Economics, where he is a Senior Research Fellow, and the London School of Hygiene and Tropical Medicine, where he is an Honorary Research Fellow.
His main research is on health systems, focusing primarily on health financing policy, health economics and health system performance, as well as on the economics of population ageing.