Last update: 29/04/2009.

Assessing the economic and budgetary consequences of population ageing is one of the activities of DG ECFIN. To this end, it carries out thorough economic and institutional analyses of the health and long-term care systems in the EU.

These welfare systems not only play an important role in the social protection system of each Member State, but they are also a major component in total age-related spending.

DG ECFIN makes health-care and long-term-care expenditure projections to analyse the size and timing of projected changes in expenditure and their underlying driving factors. These analyses also cover the sensitivity of the projections to certain economic and demographic assumptions.

The impact of ageing populations on health-care and long-term-care public expenditure is studied across a set of age-related public expenditure projections done by DG ECFIN.

• Health care
  
  Modelling is used to project health-care expenditures for the time horizon 2004-2050. It uses population projections, age-related expenditure profiles and unit cost developments for various components of health care to calculate the total future spending on health care.
  
  Several scenarios are used to project the budgetary effect of possible future developments in a number of factors affecting public health-care spending (changes in health status, income elasticity of demand, unit cost evolution, etc.).
  
  
• Long-term care
  
  Modelling is used to project long-term care expenditures for the time horizon 2004-2050. It uses population projections, age-related expenditure profiles, the data on disability prevalence and the number of people receiving various types of long-term care (formal care at home or in institutions) to calculate the total spending on long-term care. A projection of the dependent population, that is the population who needs long-term care, is also made. The difference between the dependent population and the population receiving formal care is assumed to receive only informal care or no care.
  
  Several scenarios are used to project the budgetary effect of possible future developments in a number of both exogenous and policy-related factors affecting public long-term care spending (changes in disability status over time, changes in the provision of formal long-term care, unit cost evolution, etc.). 

DG ECFIN's contributions include analytical reports and publications as well as notes to the Economic and Financial Committee and the Economic Policy Committee and its working groups, briefings, speeches and inputs to the Commission's work in general.

In particular, DG ECFIN contributions feed into policy debate, assessments and recommendations in various coordination processes, such as the Lisbon Strategy for growth and jobs, the Stability and Growth Pact and the Open method of coordination on Social Protection.

Age-related expenditure projections, including health and long-term care, form the basis for the assessment of the long-term sustainability of public finances in the context of the Stability and Growth Pact. DG ECFIN also contributes to the Open method of coordination on Social Protection regarding the sustainability of health and long-term care systems.