Estimating the future health care cost of population aging in South Africa

Zilungile Tunzi, Beatrice D. Simo-Kengne

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

This paper analyses the relationship between health care expenditure and population aging in South Africa using yearly data from 1983 to 2015. Empirical evidence from an Autoregressive Distributed Lag approach to cointegration indicates that old dependency and life expectancy are major drivers of public health expenditure in South Africa besides the income. Particularly, when structural breaks are controlled for, income exhibits a long-term elasticity with respect to health spending greater than unity; suggesting that South African public health care has become a luxury good over time. Interestingly, South African public health spending is found to be responsive to demographic development only in the long run. This is consistent with the micro evidence that health expenditure increases with individual age with significant impacts in the long term. Finally, using economic and demographic projections statistics, we find that public health expenditure could roughly double in the next fifteen years ceteris paribus.

Original languageEnglish
Pages (from-to)259-275
Number of pages17
JournalDevelopment Southern Africa
Volume37
Issue number2
DOIs
Publication statusPublished - 3 Mar 2020

Keywords

  • ARDL cointegration
  • Health expenditure
  • aging

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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