Population ageing and health financing:a method for forecasting two sides of the same coin

There is a perception that population ageing will have deleterious effects on future health financing sustainability. We propose a new method—the Population Ageing financial Sustainability gap for Health systems (or alternatively, the PASH)—to explore how changes in the population age mix will affect health expenditures and revenues. Using a set of six anonymized country scenarios that are based on data from countries in Europe and the Western Pacific representing a diverse range of health financing systems, we forecast the size of the ageing-attributable gap between health revenues and expenditures from 2020 to 2100 under current health financing arrangements. In the country with the largest financing gap in 2100 (country S6) the majority (87.1%) is caused by growth in health expenditures. However in countries that are heavily reliant on labour-market related social contributions to finance health care, a sizeable share of the financing gap is due to reductions in health revenues. We argue that analyses giving equal attention to both health expenditures and revenues steers decision makers towards a more balanced set of policy options to address the challenges of population ageing, ranging from targeting expenditures and utilization of services to diversifying revenue.