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Projecting Long-Term Care Expenditure in Four European Union Member States: The Influence of Demographic Scenarios

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Abstract

This study examines the sensitivity of future long-term care demand and expenditure estimates to official demographic projections in four selected European countries: Germany, Spain, Italy and the United Kingdom. It uses standardised methodology in the form of a macro-simulation exercise and finds evidence for significant differences in assumptions about demographic change and its effect on the demand for long-term care, and on relative and absolute long-term care expenditure. It concludes that mortality-rate assumptions can have a considerable influence on welfare policy planning. Relative dispersion between country-specific and Eurostat official estimates was found to be higher for the United Kingdom and Germany than for Italy and Spain, suggesting that demographic projections had a greater influence in those countries.

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Notes

  1. Other demographic changes, such as changes in future fertility rates, may have an impact on the availability of LTC support for informal care within families. Similarly migration rates may influence the availability of givers of formal care. However, these rates only exert an indirect influence on LTC supply and demand.

  2. Some studies claim that dramatic changes in mortality will lead to an acceleration of the ageing process and an increase in welfare expenditure which will threaten the sustainability of the welfare state (OECD 1998).

  3. Recent research by the National Research Council 2000 suggests that uncertainty in demographic forecasts is more important than was originally thought.

  4. Part of the existing uncertainty may be due to changes in social patterns of life and care (Pickard et al. 2006), (and also to changes in morbidity and available health technologies, although these have already received significant attention).

  5. Although the effect of demographic uncertainty on health and LTC expenditure has been the subject of country-specific studies (Lassila and Valkonen 2004), very little research has examined the effect of idiosyncratic demographic patterns in several European countries.

  6. Other causes of demographic uncertainty are potential demographic under-estimations due to imperfections in census design, and difficulties in obtaining representative data for certain population groups, such as those living in institutions (e.g. nursing homes).

  7. This is due to continued improvement in living conditions, and to the increased control of disease and prolongation of life achieved by advances in medical technology.

  8. Levels and fluctuations of national economic activity have marked effects on internal population movements. However, some studies question the validity of examining the effects of migration on mortality rates given that the age structures and urban locations of different migrant groups vary widely (Uitenbroek and Verhoeff 2002).

  9. Furthermore, it specifically looks at mortality, which is considered to have a direct demographic effect, whereas fertility and migration are only considered to affect future long-term care indirectly (as argued further on in the text).

  10. In 2004, Italy was the world leader, with 19.1% of the population aged 65 and over, Germany was 4th with 18.3% and Spain was 5th with 17.6%. The UK was the exception, holding 15th position among the “oldest” countries with 15.7% (Kinsella and Philips 2005).

  11. According to United Nations estimates, in the 1950s world life expectancy was 46.4 years (66.0 years in developed regions and 40.7 years in less developed regions). By 1998, world life expectancy had increased to 63.0 years (75.0 years in developed regions and 62.0 years in less developed regions.

  12. However, to date, it seems that the maximum life expectancy permitted by the genetic makeup of the human species (if such a thing exists) is somewhere between 116 and 120 years, in the light of the fact that Jeanne Calment celebrated her 120th birthday in 1995.

  13. This argument is supported by an observed pattern of decreasing mortality rates at advanced ages and low mortality rates in highly populated areas, where people have healthy lifestyles.

  14. Some evidence indicates that from 1980–1998 EU-15 experienced an overall decline in fertility of more than 20% (Hugo 2000). However, the period during which fertility exerted a significant effect on population expansion differs from country to country.

  15. In the UK, baby boomers are the generation born between 1945 and 1965. During this time some 18.5 million children were born in the UK, with two peaks in the birth rate in 1947 and 1964.

  16. For Germany the irrelevance of migration to estimates of the number of dependent persons has been demonstrated in Rothgang 2002a, b, c.

  17. As mentioned above, the effect of ageing on mortality is still under debate (Nusselder and Mackenbach 2000), although a large part of demographic uncertainty is produced by potential changes in the causes of mortality rates at later stages of life.

  18. The projections were based on constant migration assumptions and a linear growth in life expectancy. Fertility showed a smoothly increasing pattern, rising from 1.14 in 2000 to 1.72 in 2030 and from then onwards remained constant.

  19. Whilst Catalonia and the Balearic Islands embarked on industrial development before 1900, areas such as Andalusia, the Canary Islands and Extremadura did not follow suit until the 1920s.

  20. The projection also contained an “alternative” scenario with an additional gain in life expectancy of 2 years (men) and 1.9 years (women) until 2050. The above discussion, however, is based on the standard case. With respect to migration, a high scenario (+200,000 foreign (net) migrants per year) and a low scenario (+100,000 foreign (net) migrants per year) were distinguished, as well as a control scenario with no net migration of foreigners. The reference above is to the high-migration scenario. The fertility rate was kept constant at 1.4 for all scenarios.

  21. However, though it is true that GDP is partly a function of a country’s population (countries with more people than projected will tend to have larger GDPs) given that population expansion occurs mainly within the old-age cohorts it is debatable whether GDP can be expected to change much overall.

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Acknowledgements

We acknowledge the comments from the participants to our Barcelona and London Seminars in 2001–2002. This study was partly funded by the European Commission Employment and Social Affairs DG. Grant number VS/2001/0272. Referee's comments are acknowledged.

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Authors and Affiliations

  1. Research Centre on the Economics of Social Policy (CAEPS), Universitat the Barcelona, Barcelona, Catalonia, Spain

    Joan Costa-Font & Concepció Patxot

  2. LSE Health and Social Care, London School of Economics, Houghton Street, London, WC2A 2AE, UK

    Joan Costa-Font

  3. PSSRU, LSE Health and Social Care, London School of Economics, London, UK

    Raphael Wittenberg, Adelina Comas-Herrera & Linda Pickard

  4. Istituto per la Ricerca Sociale, Bologna, Italy

    Cristiano Gori, Alessandra di Maio & Alessandro Pozzi

  5. Centre for Social Policy Research, Bremen University, Bremen, Germany

    Heinz Rothgang

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  1. Joan Costa-Font
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  2. Raphael Wittenberg
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  3. Concepció Patxot
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  4. Adelina Comas-Herrera
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  5. Cristiano Gori
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  6. Alessandra di Maio
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  7. Linda Pickard
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  8. Alessandro Pozzi
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  9. Heinz Rothgang
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Correspondence to Joan Costa-Font.

Appendix

Appendix

Table A1 Projections for the United Kingdom
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Table A2 Projections for Italy
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Table A3 Projections for Germany
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Table A4 Projections for Spain
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Costa-Font, J., Wittenberg, R., Patxot, C. et al. Projecting Long-Term Care Expenditure in Four European Union Member States: The Influence of Demographic Scenarios. Soc Indic Res 86, 303–321 (2008). https://doi.org/10.1007/s11205-007-9140-4

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