Old age takes its toll: long-run projections of health-related public expenditure in Luxembourg

We simulate long-term trends in Luxembourg’s public expenditure on healthcare and on long-term care. This requires combining official population projections with micro-simulations of individuals’ health status that account for their demographic, socio-economic characteristics and their childhood circumstances. In particular, we simulate different scenarios for health-related public expenditure through 2070 to evaluate the separate contributions of population ageing, costs of producing health-related services, and the distribution of health status across age cohorts. Results suggest that increases in per capita expenditure on healthcare will mostly be driven by production costs, while increases in expenditure on long-term care will mostly reflect population ageing.