Viable health funding in time of demographic ageing

Abstract

In the past several decades, a new challenge has arisen. It refers to the rapid demographic aging of the population in developed and developing countries, quite the opposite of the previous understanding of an overpopulated planet. An increase in the older population brings implications for different segments of society and the national health system, and its funding is one of them. This paper aims to analyze if there is a relationship between government health expenditure and the increase in the older population in fourteen countries in the European Union experiencing the most intense process of demographic aging. The relationship between health expenditure and population aging is a highly debatable issue. There is significant research supporting both hypotheses, the former being that aging influences the health expenditures and the latter i.e., the opposite one that the demographic aging of the population does not drive the health expenditures. More than twenty years ago, this conundrum was addressed as a "Red Herring"; however, the debate continues up to nowadays. This paper aims to determine whether aging is a significant factor when it comes to health expenditure. Accordingly, possible further recommendations will follow should policymakers look at the aging population or other possible determinants to prevent the potential rise in health expenditure such as government social spending. The model also includes gross domestic product per capita and a dummy variable to estimate the effect of the global recession on health expenditure.