Population Ageing and Health Expenditure: New Zealand 2002

Population Ageing and Health Expenditure: New Zealand 2002 – 2051

Public Health Intelligence Occasional Bulletin No 22

Date of publication: October 2004

ISBN 0-478-25703-1 (Book)
ISBN 0-478-25704-X (Internet)

HP 3882

In approximately a decade from now the population of New Zealand will begin a period of rapid structural ageing as the large ‘baby boom’ cohorts of 1945–75 reach retirement age. This will transform the age distribution of the population, such that by the late 2040s the proportion of the population aged 65 years and over will have doubled – from 12 percent at present to approximately 24 percent. At the same time, the proportion of the population aged 85 years and over will increase more than fourfold, from approximately 1.3 to 5.5 percent.

This unprecedented demographic transformation will create a number of challenges, not least for the health sector. Some of these challenges are explored in this joint project of the Ministry of Health and the New Zealand Treasury.

The report is based on a macrosimulation model that disaggregates the New Zealand population (from 1951 to 2051) by age, gender and health status. The model projects that – under ‘central’ assumptions – government health expenditure as a proportion of GDP may increase by 50 percent, from 6.2 percent (2002) to 9.2 percent of GDP (2051). Growth in coverage and prices (non-demographic drivers) accounts for much of this increase, but ageing pressure does make it more difficult to constrain this growth.

Anticipated improvement in the health status of future generations has complex effects, as the net effect of mortality improvement is to increase spending pressure (mortality improvement contributes to population ageing and expands time lived with disability – swamping the ‘distance to death’ effect, which acts to decrease spending). Only if disability prevalence declines rapidly relative to the rate of mortality decline will compression of morbidity be achieved, lifetime health care costs reduced, and ageing pressure on health spending eased. The model indicates that plausible degrees of compression of morbidity could restrict the growth of health spending as a proportion of GDP by up to one-third (ie, health expenditure may increase from 6% to 8% of GDP, rather than to 9%).

The share of total government health expenditure consumed by older people is projected by the model to increase from 40 percent (2002) to 63 percent (2051), while at the same time the ratio of spending on the average older person to that on the average younger person is projected to decrease.

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Population Ageing and Health Expenditure: New Zealand 2002–2051 (Word, 581kB)

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Because of its file size this document has also been split into a series of PDFs:

Population Ageing and Health Expenditure: Preliminaries (PDF, 48kB)

Population Ageing and Health Expenditure: Introduction (PDF, 177kB)

Population Ageing and Health Expenditure: The Model (PDF, 84kB)

Population Ageing and Health Expenditure: Results (PDF, 501kB)

Population Ageing and Health Expenditure: Discussion (PDF, 56kB)

Population Ageing and Health Expenditure: Appendix 1 (PDF, 122kB)

Population Ageing and Health Expenditure: Appendix 2 (PDF, 62kB)

Population Ageing and Health Expenditure: Appendix 3 (PDF, 510kB)

Population Ageing and Health Expenditure: References (PDF, 560kB)

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