Rising life expectancy: Causes and consequences in the Netherlands

During the 1980’s and 1990’s life expectancy in the Netherlands has improved only slightly, mainly because of stagnating mortality declines among the very young (perinatal mortality) and among the very old (80+) [1-3]. This period of stagnation recently has been overturned by the start of rapid declines in mortality among the elderly starting around 2002. As a result, life expectancy at birth in the Netherlands has risen by almost two years between 2002 and 2008 [4-6].
This sudden rise in life expectancy has important implications for society, because it accelerates the growth of the elderly population. Larger numbers of elderly people pose additional burdens on the health care and pension systems. The full impact of increasing life expectancy on health care costs will only become apparent in the future, because health care is funded on a pay-as-you-go basis. The Dutch pension system, however, is partly funded on a defined benefit basis, so pension funds need to incorporate longer life expectancy values in the calculation of participants’ contributions now.

The sudden rise in life expectancy in the Netherlands is still largely unexplained. Preliminary analyses have shown that the relaxation of budgetary constraints in the health
care sector, which occurred in 2001, may have made an important contribution, by facilitating a strong expansion of life-saving medical care for the elderly (e.g.
cardiovascular surgery, lipid-lowering drugs) [4]. If this has indeed been the case, important questions can be raised on the cost-effectiveness of this budgetary expansion,
particularly if the full societal costs of longer life expectancy are taken into account. Relevant in this context is for instance to what extent improvements in life expectancy are translated into extensions of working life expectancy, It is also still largely unknown to what extent this increase in life expectancy has been shared by all population groups. In addition to age and gender, relevant characteristics include socio-economic status (e.g. level of education) and health status (e.g. disabled versus non-disabled). Previous analyses have shown important (but partly unintended) financial transfers between these subgroups, e.g. reverse solidarity between education groups in the pension system [7].Differential changes in life expectancy may have changed these financial redistributions, because they affect the balance of premiums
paid and benefits gained over their life-time.

Finally, it is also unclear to what extent the recent upturn of life expectancy should influence life expectancy forecasts. Was this simply a matter of catching up with other
countries which had already seen their life expectancy go up earlier? Or can this rapid increase be expected to continue at the same pace? Based on an analysis of the causes of the recent increase in life expectancy, a range of plausible health scenarios can be created which can help to improve life expectancy forecasts. These can in their turn be used to answer important questions about the future costs of health care and pension schemes, and their distribution, both under unchanged and changed financing schemes for health care and pensions.

This project builds upon the Netspar theme ‘Living longer in good health’ in which it was investigated to what extent the onset of ill health and its consequences
(functional decline, disability, dependence on health- and social care services) could be postponed to more advanced ages. The main aim of the current proposal is to create a better understanding of the causes and consequences of the recent increase in life expectancy in the Netherlands, and to provide an empirical underpinning for policy discussions about solidarity between socio-economic groups in the financing of health care utilization and pension schemes.

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Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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