This international workshop, dedicated to the issue of the sustainability of health systems in the face of an ageing population, highlighted the fact that the phenomenon affects all countries, whether developed or developing. Since the middle of the 19th century, life expectancy at birth in all industrialized nations has doubled and, in some cases, more than doubled. At the same time, birth rates and fertility rates have fallen and, in Western countries, have dropped to a quarter of their levels at the beginning of the 20th century. Italy, together with Japan, has the highest percentage of over-65-year-olds over total population and will continue to have one of the most elderly populations in the future, with over-65s exceeding 30 percent by 2050, the highest percentage after Japan and Spain.
Having outlined these basic features of the demographic scenario, the workshop participants addressed the question of the consequences that an ageing population will have on health systems and, more generally, on social security systems. A consensus emerged during the discussions regarding certain points, including the speed and, in some respects, irreversibility of the ageing trend and the numerous critical issues that this gives rise to. There was also agreement that the ageing of the population is impacting, in various ways, on all economic, financial and social magnitudes and sectors.
Countries with advanced economies and welfare systems will be the first to experience the consequences of population ageing, which will include impacts on welfare expenditure, the proportion of tax revenue and social security contributions to total public revenue, changes in consumption models, the size and composition of the workforce, savings and interest-rate trends, capital accumulation, total factor productivity, systemic growth, interpersonal relationships within families and social organization as a whole.
In contrast with the 1950s and 1960s, which saw the development of welfare systems that were predominantly “pay-as-you-go”-funded, the inversion of the demographic pyramid will necessarily entail a review of this model through the diversification of financing. Indeed, the public pay-as-you-go system could be combined with a complementary approach based on long-term investment programs. This will require a radical overhaul of welfare systems in a majority of countries.
In addition, an elderly population consumes less on average than a younger population and, in particular, has a consumption mix that is different and concentrated more on items such as health and pharmaceutical products. This means that ageing will affect the level and composition of demand and influence the development of productive sectors.
However, it is not only the real economy that will be affected. An ageing population is apt to divest itself of previously accumulated investments, with the effect of reducing asset prices and increasing returns on securities and bonds. This should be taken into account in multi-pillar reform proposals for health and pension systems, in order to achieve a balance between pay-as-you-go funding and financing through income from ad hoc market investments.
Furthermore, in the long term migration cannot effectively counterbalance ageing as the latter is a universal phenomenon applying to everyone, whilst migration flows are finite both in terms of the physical capacity of the host country to receive them and the size of the labor markets that employ immigrants.
As regards the different categories of welfare expenditure, health is the area where the effects of population ageing could be most felt and less predictable and could, in particular, combine with effects that are non-demographically driven, including: an increase in the prices of care services for non-self-sufficient people; changes on the demand side, such as the emergence of preferences in favor of more health care resulting from greater levels of information and awareness; and changes on the supply side, linked to scientific and technological innovation, with the introduction of more effective but also more expensive therapies and medications.
A further non-demographic driver of an institutional nature relates to the governance structure of health systems and regulatory models on the supply and demand sides aimed at promoting cost-effectiveness. Weak governance systems and low levels of responsibilization in the area of access to services make it difficult to plan expenditure and monitor the optimal allocation of resources.
Thus, for health systems, a problem of financial sustainability arises that is in many respects unpredictable but in respect of which it is necessary to be prepared. The workshop participants therefore concluded that there is a need to: 1) evaluate health-expenditure sustainability issues in relation to the other major heading of welfare expenditure, namely, pensions; and 2) consider both these categories of expenditure within the context of the welfare system as a whole.
Finally, the participants noted that growth in demand for welfare services is set to outstrip economic growth. If wholesale rationing (a source of social tension) and an increase in tax and social security burdens (with depressive effects on the economy) are to be avoided, it is necessary to adopt rigorous and unequivocal approaches to expenditure planning. This would involve determining the resources that may be allocated on a year-by-year basis, including over the course of multiyear planning cycles, without compromising the development of the economic and welfare system, and allocating the said resources optimally, taking into account the economic and health characteristics of the intended beneficiaries.