Introductory Paper
by Prof Dr James Vaupel and Prof Dr Gabriele Doblhammer-Reiter

Over the past few decades, the populations of most European countries have undergone fundamental change. Germany, although far from the only one seeing these developments, is a useful example from which to draw statistics to illustrate them.

The total period-fertility rate in Europe has declined markedly and is now below replacement level (2.1) in all of Europe. Completed cohort fertility rates have declined, too. In about half of the European countries, women born in the early 1960s will have given birth to less than two children in their lifetime. Persistent low fertility is being accompanied by a remarkable increase in life expectancy: in Germany, for example, it climbed by more than 30 years over the 20^th century.

Low fertility and rising life expectancy are exerting a lasting influence on the age composition of the population. By 2030, the world population’s share of people aged 65+ will have risen from 6.9% today to at least 12%. Even if emerging and developing countries increasingly witness population ageing, and even if they do so at a greater rate than the industrialised countries, the situation in Western societies is particularly striking. Germany provides an apt illustration. In 2000, 17% of the total population was aged 65 or above: by 2030 this will have almost doubled to reach 30% – or nearly one third of the whole. The 75+, 85+, and 100+ age groups are seeing a similar shift. The first will climb from 7.4% of the population to 14%, the numbers for those 85+ are expected to grow from 1.9% to 4.4%.

Another effect of demographic change is that the total population is shrinking. In 2002, for instance, Germany’s population stood at 82.2 million. According to recent United Nations projections, the figure will have declined to reach 79.3 million by 2030.

Life expectancy is expected to continue to increase. At present, this figure the average woman living in Europe will live about 82-83 years, the average man 77-78: for a combined figure of around 80 years. The estimates assume that the next century will not see improvements in health. However, by 2057 a child born today will have benefited from another 50 years of progress in scientific research, technical developments, health care, education, and gains made in environmental and employment protection. Demographers have been observing a growing number of oldest-old and the long-term development of record life-expectancy. Between 1980 and 2000, the number of people aged 100+ has increased more than seven times – and more than fifty times since the 1960s. However, the most remarkable observation is that a rising, linear trend has prevailed in record life-expectancy since 1840: in the mid-19^th century, Swedish women enjoyed the world’s highest life expectancy at 45 years. Today, Japanese women take the lead, enjoying lives close to 86 years. The increase of about two and a half years per decade is not only characteristic of Sweden and Japan, but also of most of the other richer countries of the world. Russia is a notable exception: between 1987 and 1994, life expectancy decreased by about five years and has been very unstable since. The United States is another exception as Americans have seen a slower increase in life expectancy since 1980. Two developments may account for this: the unhealthy behaviour displayed among some segments of the American population and growing health disparities.

Most European countries, however, today do not show signs of deceleration of this linear trend. Thus, it is highly likely that in the countries enjoying the highest life expectancies, the average length of life will continue to rise in the decades to come, at a pace of about 2.5 years per decade. Taking this into account, it is likely that at least half of the children born today will reach an age of more than 100. Naturally, there are no guarantees. The longevity of individuals varies greatly: lifespans are the result of a complex combination of individually-driven factors, such as genetic disposition, early life conditions, current lifestyle, and available medical technology, to name just the most important. More generally, however, planners and decision-makers should take into account that we have not yet reached the limits of longevity.

Demographic change in most industrialised countries will drive policy development over the coming decades, and it will most likely have an impact on emerging countries in the future too. Thus, policies and policy reforms geared towards the health sector, the labour market, retirement, childcare, education, tax, and other fields must adapt the Welfare State to the conditions of an “ageing society”.

In the future, smaller cohorts of workers will contribute to the coffers of health insurers. At the same time, we are faced with ageing societies that seemingly incurring more health costs. For instance, the OECD expects public expenditure to the health system to rise from 5.7% of GDP in 2000 to 8.8 % in 2050 in Germany, from 6.9% to 9.4 % in France, from 5.6% to 7.3 % in the United Kingdom, and from 2.6 to 7.0 % in the United States. Economists are alarmed about the consequences of the expected “cost explosion” in the health system. According to projections for Germany, for instance, the rate of contributions to public health insurances will need to rise from 13.5% of the gross income today to 20% in 2020, and to 40% in 2040.

Rising life expectancy, however, does not seem to be the main driving force behind these developments. Demographic studies have shown that health care costs do not rise automatically with higher age. Many other, diverse reasons come into play. First, before 1950, most of the increase in life expectancy was the result of progress against diseases of children and of working age adults. After 1950 and especially after 1970, progress against chronic diseases of old age has been as rapid as the improvements in countering those of younger ages. People today are living longer because they are healthy longer: as lifespan and healthy lifespan are rising at about the same pace. Many elderly suffer a period of disability when they approach the end of life, but this period is being pushed to higher and higher ages. Indeed, evidence from the United States suggests that the period itself is getting somewhat shorter. Second, people who die in their late 80s or 90s generally have been healthy most of their lives and their deaths are quick, incurring little expense for the health system. At the same time, people who die earlier more often do so because of diseases that incur high costs to the health system (such as cancer and cardiovascular disease). Our knowledge of age-related health disparities in a population is too fragmented to draw precise conclusions, however, and further research is needed. Third, older people seem to display more health-conscious behaviour and they make use of medical examination and prevention more regularly than their younger counterparts. Fourth, the costs of health care have been climbing over the last decades due to progress made in medical treatment. People are better informed about these opportunities, and people are richer; hence their expectations vis-à-vis the health system have risen. This behaviour is not an age-specific one; rather it is the expression of a general trend in Western societies. Finally, in many European countries the option of extending the working lifetime has either been placed on the agenda of discussion or it has already been taken. Greater life expectancy can result in an extension of the working lifetime, thus leading to an increase in the number of contributors and contributions made to tax-oriented or private health insurances. Thus, the “debit side”, i.e., higher expenditures of the health system in general, may be compensated by the “credit side” i.e., by an increase in funds if the period of liability to pay contributions is extended.

Advanced age is the single largest risk factor in predicting disability. The probability of needing care rises exponentially above the age of 80. In Germany in 2005, for example, about 31.5% of males and almost 50.6% of females aged 85+ were in this situation. Demographers predict a marked increase in the number of such persons by 2030. Population ageing is the main driving factor behind this development: even if all additional years gained by increasing life expectancy were healthy years, the number of people in need of care would still grow.

Within this group, those who are married and have children will constitute the fastest section. These are less likely to need institutionalised care, as chances are good that a family member will provide some of the care. Consequently, there may be a greater number of people in need of out-patient treatment. Thus, a solution would be to support and strengthen the reliance of families on nursing services, since the families themselves will not be in the position to fully shoulder care responsibilities. In terms of care provision, a distinction needs to be made between the incidence and the intensity of care. The incidence indicates whether or not care is provided; intensity is defined by the number of hours of care provision. Since the family will have a stronger presence in the future than today, care policies should be geared towards supplementing the number of hours provided by family care. Middle-aged women – the main care providers today – will be increasingly active in the labour force. Policies that allow employees to take short-term leave in times of increased care demand have to be implemented. Elderly couples will need help from professional services in order to fulfil care tasks that are difficult. The job market has to become more flexible so as to allow caregivers to take a time out and return to their jobs without obstacles placed in their way. In order to guarantee that care providers are covered by the social security system, caring for a family member should be rewarded by means of allowances. By the same token, the years spent caring should be accredited to pension entitlements more effectively. Considering that at present women are the primary care givers, a focus should be placed on enhancing gender equality through policies aimed at male care providers.

In future, a growing number of elderly will have more financial resources at hand to co-finance their needs. Thus, people should be given incentives to focus on private health care provisions, to foster a healthier life-style, and to become increasingly self-reliant. The market should have a larger focus on implementing and promoting private care insurances as well as private nursing services. Another approach may be the introduction of new forms of mortgage and housing, including care offers that allow the elderly to stay at home as long as possible.

How might this strengthening of the private sector affect societies in the industrial and in the emerging countries? The more the Welfare State withdraws from the health system, the more likely it is that a social imbalance in the accessibility of medical care will grow. For instance, persons on a low income who do or do not pay social security contributions, and those who receive unemployment benefit and other social welfare benefits on a permanent basis, are less and less likely to be in the position to put money aside to meet present or future health care needs; thus they are more dependent on institutionalised forms of care.

These arguments show that rising life expectancy presents the individual with valuable opportunities but constitutes a challenge to the Welfare State. Quality, equality, and equity – these are three goals of health policies that remain even in times of demographic change. Growing expenditure, a greater burden placed on taxpayers and contributors, and the demand to introduce more economic and efficient structures to the health system may be justified on political or economic grounds. In terms of the population trends, however, the available evidence suggests cautious optimism that the situation at least will not necessarily get worse simply because we age.

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