Health expenditure in the context of social expenditure. A generational analysis of tendencies in Spain in the context of demographic aging. 2008 SESPAS Report

The tendency for public welfare spending to be increasingly aimed at the elderly has been identified in several developed countries. While population aging is a common trend, it is not obvious why the shift in spending exceeds the trend in aging, or why per capita spending on the elderly is increasing. In the first part of the present article, we show that this trend is occurring in Spain, identify the losers from this development, discuss the policies that underlie it, and propose adjustments based on Musgrave's fixed proportions rule for fair intergenerational distribution. These policies aim to manage population aging, labor market participation of youth and women, as well as public policies that combine 'work-fare' strategies with the more traditional 'welfare' strategies. In the second part of this paper, we explore the contribution of public health expenditure to overall public social expenditure, and analyze the effect of increasing health on distributional fairness. This analysis is guided by our perception that social policy, including health policy, should be more horizontal, i.e. it should take into account the sum total of a mixed basket of resources aimed at any recipient group, to avoid the skewed allocation of resources that arises from compounding various independent distributions of resources. Coordination of the various channels of social expenditure should ensure precisely targeted recipients and cross-departmental sources. The normative fairness criterion to be used should be precisely specified. In Spain (1980-2000) the oldest segment of the population has gained the most, appropriating an increased share of resources. This increase goes beyond the amount that could be explained by population aging throughout the period. The 'losers' are individuals with different fragility conditions. On average the youngest working group has suffered the highest relative loss.