Population aging and healthcare - applying estimators to the projected future of Sweden

Abstract: This paper presents an empirical study on the effects of an aging population on a country's healthcare expenditure. The long-term trend of decreasing fertility rates and increased life expectancy results in a larger share of older people with greater demand for healthcare. This study investigates the macroeconomic effects of population aging by estimating the effects on healthcare expenditure. The estimators are applied to a new demographic projection of Sweden by the SCB (2023). The results correspond to previous studies and find that a share of older people relative to those of working age and younger increases national healthcare expenditure, both in absolute terms and as a share of GDP. Given the estimated effects and the projected future age distribution of Sweden, healthcare's share of GDP is estimated to progressively increase by several percentage points in future decades. Similar concerns apply to other countries with low and decreasing fertility rates.