Does Education Mitigate the Effect of Population Aging on Health Expenditure? A Panel Data Study of Latin American Countries

Objective: To examine whether the effect of population aging on healthcare expenditures as a share of Gross Domestic Product (GDP) is attenuated in more educated countries. Method: The analysis is based on a dataset of 22 Latin American countries between 1995 and 2013. We estimate panel data models with country and time fixed effects, and control for potential nonlinear effects of population aging on health expenditure. Results: We find population aging increases health expenditure as a share of GDP in economies characterized by low levels of education, but this effect is mitigated in economies with higher levels of education. Results are driven by private health expenditures. Discussion: Results suggest population aging and education have a stronger influence on healthcare expenditures in less developed countries. This finding is important in a context in which the rapid growth of the aging population is likely to lead to significant costs in terms of health expenditures, but less so in more educated societies.