The sensitivity of health-care costs to changes in population age structure

Average health-care costs increase with age, beyond the first few years of life, and the increase is especially pronounced after middle age. It is to be expected, therefore, that overall health-care costs will tend to rise in the future as the average age of the population increases throughout North America and other developed areas of the world. However, the effects will not be all in one direction: while the increased numbers of elderly will require more health-care services, the reduced numbers of young children will require fewer. Also, the prospect of higher costs is best viewed in relation to the economy's future ability to bear those costs: population change will affect the demand for health care but it will also affect the productive capacity of the economy and the level of income per capita. Proper anticipation of the future health-care burden thus requires that both types of effect be taken into account.