How Aging Population Affects Health Care Expenditures in Pakistan? A Bayesian VAR Analysis

The changing population structure has raised serious concerns about future health care expenditures in Pakistan. Growing proportion of aged people could lead to a higher health care expenditure as occurrence of chronic-degenerative diseases increases and a large demand for health and social care is visualized with a subsequent effect on health expenditures. Considering the above research problem, the current study analyzed the effects of ageing population on health care expenditures in Pakistan using a time-series data from period 1995 to 2014. Bayesian VAR approach was applied to evaluate the impacts of population ageing on health care expenditures. From the results of the study it was clear that health expenditure of Pakistan showed more response towards aged population as compared to life expectancy and per capita GDP. Population aging brought about 2.6 percent increase in health care expenditures and are expected to rise to 17.2 percent in tenth year when compared to the base year. Life expectancy also brought an increase in healthcare expenditure; bringing about 3.6 percent increase in health care expenditures per capita and 14.2 percent increase in tenth year. Real GDP per capita explains 1.7 percent fluctuation in health care expenditures per capita in third year which increases to 3 percent in tenth year. A macro level dedicated health policy for elderly people could help to minimize the health care expenditures such as, training of primary care doctors in geriatrics and provision of domiciliary care. Ageing population illnesses that give hike to health care expenditure should be considered for further research to get more truthful outcomes.