Ageing and health care: inexorable costs versus modest adaptation

This "Working Paper" consists of two documents. The first is a submission to the Productivity Commission inquiry "Implications of an Ageing Australia". The second is a Research Note "Why Ageing is Unlikely to be a Problem for the Health Sector". This was the key document submitted to the Productivity Commission. Its abstract is as follows: This note summarises and elaborates some of the results obtained by Richardson and Robertson (1999). It focuses upon an issue which many still find paradoxical, viz, that while older people spend much more upon health than younger people, this does not imply that health expenditures in the next half century will necessarily become a major problem. The reason for this is two-fold. Firstly, there is no necessary relationship between cross sectional and time series data. Secondly, any effect which might arise from ageing per se will be quantitatively small in relation to GDP growth. An important caveat is that ageing may accentuate the cost impact of new technologies in the health sector.