Ageing and the Cost of Health Services

2017-06-06T00:55:03Z (GMT) by Richardson, Jeff Robertson, Iain
There have been a number of estimates of the impact of ageing upon the cost of health services in Australia. The broad methodology adopted has been similar in each of these and similar to the methods used in other countries. Current or projected expenditures for each age sex cohort are multiplied by the projected population in each cohort at future points in time and summed to obtain total expenditure. Two of these studies have recently made allowance for the `Fuch's effect', viz, the hypothesis that illness and expenditure should be estimated, not from the age of a cohort, but from the number of years to expected death. The chief theme in the present paper is that this methodology, is unreliable and misleading. The argument is supported by the analysis of three sets of data, viz, historical population and expenditure data, Australian cross sectional population and GP utilisation data for 1996 and expenditure and population data for 21 OECD countries for 1975, 1985 and 1995. In each case the relationship between age sex predicted and actual expenditure is examined. The conclusion is that expenditures are not driven mechanistically by demographic factors. This, in turn, implies that future health care costs will be determined by other factors. Some will be responsive to policy but not others. In the latter category is the impact of new technology. The former include incentive structure of the health sector and the supply of physical and human resources.