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Ageing and the Challenges of New Technologies: Can OECD Social and Healthcare Systems Provide for the Future?

Ageing and the new technologies illustrate how successful modern societies have been in addressing challenges to push out the boundaries of human life and medical knowledge. They represent both a blessing and a concern for policymakers in charge of ensuring the long-term sustainability of financing arrangements for health and long-term care systems. This sustainability is a key area of research, given the potential vulnerability of social arrangements under fiscal pressures. At the same time, the implications of the current demographic transition experienced by developed countries are also better understood. Therefore, the question is whether in the light of the ageing process and the rapid introduction of new technologies, current health and social care systems can provide for the future. Answers to this question will impact the distribution of health and wealth, the public finance arrangements in place in a number of countries, and ultimately the notion of social consensus upon which these societies are built. The share of health expenditure in GDP stabilized around 8.2 per cent between 1992 and 1999 for a group of 20 OECD countries. 2 However, this share increased by two percentage points in the 1970s and by one percentage point in the 1980s. The current slowdown of the economy could lead to a further steep increase of the ratio, particularly in those countries with rapidly increasing health expenditure, such as the United States. Ageing has paradoxical impacts. Healthcare costs are linked with age in micro data, and up to 40 or 50 per cent of healthcare expenditure is devoted to older persons as a result. However, there is no link between relative levels of spending and demographic indicators at an aggregate level. In addition, when the concentration of healthcare costs at the end of life is taken into account, the impact of ageing on future health expenditure is lessened. The relationship between ageing and healthcare expenditure is therefore far more complex. Most empirical results tend to show that differences in income, supply-side and institutional variables account for most of the differences in healthcare expenditure across countries, although cohorts and generation effects may also play a role.