Assessing the effects of population aging on health financing structures: evidence from APEC countries using panel data

Abstract

An aging population, along with rising chronic diseases and disabilities, is increasing the demand for healthcare services; this places significant pressure on healthcare costs and public finances, particularly in countries with high public health expenditures. Asia-Pacific countries are at the forefront of global population aging, and the rapid demographic transformation in the region has significant economic, social, and political consequences. This study aims to evaluate the impact of selected aging indicators on health financing systems in Asia-Pacific Economic Cooperation (APEC) countries. In this study, the proportion of the population aged 60-80 and over, life expectancy at birth, and gender ratio were used as indicators of aging. To examine the effects on health financing in APEC countries during the 2000-2020 period, three separate models were established, including public health expenditures, private health expenditures, and out-of-pocket health expenditures; the analyses were carried out using panel quantile, Driscoll-Kraay, and Ridge methods. The findings show that life expectancy reduces public health expenditures except in the 90th quartile, while increasing private health expenditures in all quartiles. Although no significant relationship was found for out-of-pocket health expenditures, life expectancy stands out as the most prominent predictor. The Driscoll-Kraay and Ridge results reveal that the population aged 80 and over increases public health expenditures; this is associated with higher life expectancy and lower private health expenditures. Furthermore, the population aged 60 and over reduces out-of-pocket health expenditures, while the gender ratio was not found to be significant in all models. Life expectancy is the strongest predictor of out-of-pocket health expenditures. In contrast, the contribution of the population aged 80 and over to the decline in private health expenditures is limited. Gender ratio does not show a significant impact on health expenditures in APEC countries. These findings highlight the importance of developing age-sensitive and sustainable health financing policies in APEC countries.