[Ageing, medical progress and the growth of healthcare expenditure]

As healthcare expenditure typically rises during a person's lifetime, there are widespread fears that the ageing of the German population together with technical progress in medicine will be a serious threat to future healthcare financing. The relationship between ageing and growth of healthcare expenditure has been intensively studied over the past 15 years both theoretically and empirically. In this article it will be demonstrated that the highest expenditure is not due to age per se but rather to proximity to death. However, even taking this effect into account simulations show that the increase in life expectancy as well as medical progress will contribute to the growth of per capita expenditure in the German healthcare insurance system.