Healthcare expenditure projections up to 2050: ageing and the COVID-19 crisis

Carsten Colombier and Thomas Braendle

MPRA Paper from University Library of Munich, Germany

Abstract: Even before the COVID-19 crisis, rapidly growing healthcare expenditure was calling the sustainabi- lity of public finances into question. The pandemic has reinforced these concerns and also under- lined the importance of resilient healthcare systems. To highlight the need for economic policy action in the healthcare sector, this paper provides expenditure projections for Switzerland up to 2050. The expenditure projections take into account the financial impact of the COVID-19 crisis and foreseeable ageing of the population. The projections show that while COVID-related health- care expenditure is a burden on public budgets in the short term, the ageing of the population will put continued and growing pressure on public budgets and compulsory health insurance until 2050. In the medium to long term, however, healthcare expenditure is driven not only by demogra- phic change, but also by non-demographic factors such as rising income, medical advances and Baumol's cost disease. The projections also suggest that long-term care will be affected by higher cost growth than the rest of the healthcare system. The sensitivity analyses show that the strongest cost pressure comes from alternative assumptions about the effect of the non-demographic cost drivers. In addition, a policy scenario discusses the cost-dampening effects of cost targets.

Keywords: healthcare expenditure growth; population ageing; long-term projections; sustainabi- lity; public finances; health insurance; budgetary target; Baumol's cost disease (search for similar items in EconPapers)
JEL-codes: H51 I13 I18 (search for similar items in EconPapers)
Date: 2022-07-01
New Economics Papers: this item is included in nep-age and nep-hea
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