Aging crisis

According to the Survey of Health, Ageing and Retirement in Europe (SHARE) website, the ratio of older people to total population is higher in Europe than on any other continent and this phenomenon will continue well into this century.

This growing population of retirees will create additional economic pressures for European countries where debt levels are already high. Governments, faced with the current global financial downturn, have taken on new debt in an attempt to spend their way out of the recession. Yet the money they are currently spending is minuscule in comparison to the money governments will have to spend on healthcare and pensions in the future, the report said.

The projected impact on public finances will dwarf the effect of the current financial crisis “many times over," said the commission paper.

Thirteen EU countries are at risk and need to begin looking for ways to reduce debt and restructure healthcare and pension systems. Those nations are: Britain, Cyprus, the Czech Republic, Greece, Ireland, Latvia, Lithuania, Malta, the Netherlands, Romania, Slovakia, Slovenia and Spain.

Among the 13 nations, Britain is the largest of the countries in which a growing army of retirees threatens to create unsustainable debt levels.

Countries at risk vary

The European Commission paper says some countries are better prepared than others. According to Commission's report, Bulgaria, Denmark, Estonia, Finland and Sweden have already made the necessary budgetary adjustments required to meet their future pension and healthcare needs.

Germany will also be able to handle the budgetary issues of an aging populace, according to the report.

On the other hand, France, Hungary, Italy, Poland and Portugal are already in deep budgetary trouble without these added concerns and their economies will feel the effects much sooner.

Of the countries mentioned, Greece was second only to Britain in age-related expenditures, and its exceedingly high debt ratio compounds ongoing concerns of its financial sustainability.

Healthcare systems at risk

Several solutions have been proposed to finance the projected increased costs of pensions and healthcare benefits for the aging population. All of them will likely prove controversial.

One suggestion is that retirement ages be raised from 65 to 67. Having people work longer would have a beneficial impact not only on their pensions, but on government tax revenues. In March, the Dutch government proposed just such a solution and trade unions reacted by staging a series of work stoppages.

The report also suggested that governments should look at how healthcare is paid for and re-examine “the balance of financing between patients, public and private insurers.

But perhaps the most controversial suggestion on how to reform health care was to examine “ethical issues like access to expensive treatments.” That could mean that governments would look at no longer funding expensive, life-saving procedures in the future.

av/AFP/Reuters
Editor: Trinity Hartman