© International Epidemiological Association 2002
Printed in Great Britain
International Journal of Epidemiology 2002;31:754–757
Social policy and population ageing:
challenges for north and south
Peter Lloyd-Sherlock
The challenge of social policy for
older people
more heterogeneous needs and expectations…Also the
welfare state’s erstwhile ‘model family’ is no longer preeminent.’ (ref. 2, p. 9)
Social policy for older people has had to respond to a series of
challenges. The first, and perhaps most significant, of these is a
generalized perception of a social policy ‘crisis‘ and the need to
reappraise the role of the state. This has been closely associated
with an apparent paradigm shift away from state-centred welfarism that emphasised solidarity and aspired to universality.
In its place has come a neo-liberal model, which emphasizes
individual agency and pluralism, while playing down the role of
the public sector. This shift is reflected in international debates
about social policies for older people, including pension reform
and health care. However, some of the basic precepts underlying
this apparent paradigm change are open to question. Revisionists
have cast some doubt on claims that western welfare states are
inherently inefficient and unsustainable.1 While social policies
in developing countries suffer many shortcomings, they have
often contributed to rapid improvements in basic indicators of
wellbeing.
In fact, few developed countries have profoundly reoriented
their welfare policies in response to neo-liberal dictates. In some
cases, such as the US, there was little scope for further reducing
state involvement in social provision (barring occasional calls
for the break-up of Medicare). In others, a strong ideological
attachment to state welfarism, and political barriers have precluded a radical overall of social policy. Moreover, the fiscal
imperatives of the 1980s have relaxed somewhat since that
time. A further reason is that hard evidence that privatized
social policies work better than traditional models remains
weak and highly contested.
By contrast, the paradigm shift has been strongly felt by
many developing countries. In these countries fiscal constraints
remain acute, and the influence of multilateral organizations
such as the World Bank and International Monetary Fund is much
larger. The impact has been especially significant in middleincome countries where social policies were already reasonably
well-developed, and where there was therefore more to be
lost. Whether these changes should be seen as nefarious or
‘necessary medicine’ remains a matter of heated debate.
A second set of challenges relates to the changing social,
economic and cultural contexts in which social policies for older
people are located. According to Esping-Andersen:
‘The contemporary welfare state addresses a past social order
… The much greater occupational and life-cycle differentiation that characterises ‘postindustrial’ society implies also
School of Development Studies, University of East Anglia, Norwich, Norfolk,
UK.
A host of changes including the status of women, in patterns
of living arrangements and in the labour market may have
profound influences on the needs of older people and how
these can be met. The standard modernization thesis posits that
older people become increasingly isolated and vulnerable as the
result of such changes.3,4 Research from developing countries
shows that ‘traditional’ social structures, such as extended
families and communities are becoming less reliable sources of
support for older people than may have been the case in the
past.5 This has led to increased needs for formal income support
and care provision in such countries.
A third challenge stems from demographic change. Many
developed countries now have highly aged population structures, which has led to fears about an ‘old age crisis‘, and the
sustainability of existing welfare programmes for older people.6
According to the more sensationalistic commentators:
‘Official projections suggest that within 30 years, developed
countries will have to spend at least an extra 9 to 16 per cent
of GDP simply to meet their old age benefit promises.
The unfunded liabilities for pensions … are already almost
US$35 trillion. Add in health care, and the total jumps to at
least twice as much … Global ageing could trigger a crisis
that engulfs the world economy. This crisis may even
threaten democracy itself.’ (ref. 7, pp. 46 and 55)
But are such apocalyptic views of a future ‘ageing crisis’
justified? Population ageing may not inevitably lead to a social
policy cost explosion, as the needs and capabilities of future
generations of older people are likely to be different to those of
elders today.
For example, epidemiological research has shown that the
relationship between chronological age and health status is
fairly elastic. Also, the way in which social policies are organised
can have a large impact on their cost effectiveness. Moreover, if
developed economies enjoy rapid growth, meeting the needs
of older people should not be beyond their financial means.
These issues are discussed further below, with reference to
health costs.
For most low-income countries, the impact of ageing on
social policy will be rather different. While their population
structures are still relatively youthful, the speed of ageing is
projected to be very rapid. To date, social policies have tended
to focus on the needs of other age groups, such as children,
mothers and ‘workers’. This is particularly apparent in the area
of health care. Instead of sustaining existing programmes, the
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SOCIAL POLICY AND POPULATION AGEING
main challenge for low-income countries will be to factor older
people into social policies for the first time. For many countries,
this will occur against a backdrop of severe resource constraints
and generalized social hardship. In these cases, a shift in the priorities of external donors and non-governmental organizations
will also be required. For some countries, meeting the needs of
elders will be almost entirely over-shadowed by the HIV/AIDS
pandemic. In these cases, it should not be forgotten that older
people are affected by the pandemic and can play an important
role as carers for people with AIDS and orphans.
Social policy and older people:
the global agenda
In April 2002, the Second World Assembly on Ageing is due
to take place in Madrid. This follows on from the designation
of 1999 as the United Nations International Year of the Older
Person. It is expected that the Assembly will give rise to an
ambitious International Plan of Action, which will include
wide-ranging social policy guarantees for older people.
The World Assembly should be welcomed as an opportunity
to raise awareness about population ageing issues, but there are
reasons for doubting that it will have a substantial impact in
terms of actual policy. One reason is that international debate
on ageing is still in its infancy, and has yet to produce an influential global policy community whose principal concern lies
with the health and wellbeing of older people. A second cause
for caution is the degree to which social policy challenges facing
developed countries can be reconciled with the very different
sets of problems confronted by poorer nations. There was considerable criticism that the First World Assembly (held in Vienna
in 1982) was dominated by northern gerontologists, leading
to proposals that were inappropriate to and beyond the means
of the south.8 Fears that the same will occur again have led
to disagreements in the preparatory meetings for the Second
Assembly.
A further problem is that global debates about ageing are
permeated by a negative paradigm of old age. This draws on
Western experiences, which equate old age with withdrawal
(from both economic and social spheres), dependency, physical
frailty, and pensioner status. The applicability of these stereotypes in the context of developed countries is highly contestable,
but in most developing countries they are largely meaningless.
Older people are seen as marginal to economic activity and
development, and are usually excluded from labour force statistics, yet empirical research from around the world challenges
this view.9,10
The negative paradigm of old age is clearly apparent in international debates about pension policy reform: an issue that has
dominated the global ageing agenda. Current orthodoxy rests
on the questionable notion of inevitable economic withdrawal
in later life, and overlooks the fact that for many older people
in poorer countries the prospects of receiving a pension are
remote. The content of pension reform debates has been strongly
conditioned by the welfare paradigm shift mentioned above.
This has mainly entailed an ideological disagreement between
traditional ‘welfarists’ (as typified by the International Labour
Organization), who have championed the continued role of the
state, and neo-liberals (principally the World Bank), who have
advocated privately managed individual savings funds. By
755
the mid-1990s the debate had largely been won by the neoliberals.11 However, some recent studies have queried aspects
of this consensus, and have suggested that state financed old
age support may even be a feasible policy option in poorer
countries.12–14
In a similar way, this negative ageing paradigm means that
older peoples’ health needs are often characterized as requiring
high cost, long-term treatments. Elders are therefore seen as
part of the ‘problem’ of overly curative health care, low technical efficiency (narrowly defined) and mounting costs. In an
extreme form this has given rise to statements that adding years
to later life simply brings closer the bankruptcy of schemes such
as Medicare. These views lose sight of the fact that, whilst the
very old are more likely to suffer from chronic illnesses, there
is still considerable scope to improve their health and quality
of life through relatively low cost interventions. Also, access to
basic services remains a key issue for many older people in
poorer parts of the world. Far more could be done to mainstream
older people into primary health care programmes, particularly
in low-income countries. Indeed, launching a global campaign
for primary health care in later life might be a suitable rallying
point for the Second World Assembly.
Health policy: is a cost explosion
inevitable?
Studies from developed countries consistently show that levels
of health spending are significantly higher for elders than for
other age groups.15 It would therefore seem logical that population ageing will inevitably lead to an increased financial burden
on the health services. Nevertheless, claims that population ageing
will lead to a health care cost explosion, both in the north and
the south, would appear to be exaggerated for a number of reasons.
First, even if population ageing is associated with a global
increase in the incidence of certain forms of chronic disease, its
impact on health services may not be as direct as is widely
predicted. Rather than driving up health spending, the main
impact of ageing may be a shifting of priorities. Any society is
faced by a higher demand for health services than it can meet,
and therefore some form of rationing is always present. The
gap between demand and provision is especially wide in lower
income countries, highlighted by failures such as the lack of
access of most AIDS sufferers to effective drug therapies. The
likelihood that changing demographics will lead to a health care
cost explosion in these contexts is remote.
Even in developed countries there is clear evidence that health
care spending is not directly affected by population ageing per se.
A range of other factors, such as technological change, and
national wealth have been found to be more significant.16
Current spending is heavily concentrated in the last years of an
individual’s life, and so is more influenced by mortality than by
the average age of the population.17 Indeed, the costs of dying
may be lower for elders, if they receive less treatment as a result
of ageist bias.18 In developing countries rapid population ageing
will lead to a rise in mortality, but this will be far smaller than
the mortality decline achieved in recent decades. Figure 1 shows
that in Brazil, despite rapid ageing, mortality levels in 2050 will
be roughly on a par with those of 1980.
Comparisons across developed countries show that differences in expenditure are largely the result of how their health
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INTERNATIONAL JOURNAL OF EPIDEMIOLOGY
care systems are organised and financed rather than of demographic change.19 This is an area where policy can have a large
impact in heading off cost escalation. Two issues of particular
pertinence are the desirability of dedicated health funds for
older people, and the influence of private health insurance.
Only two countries have health funds specifically concerned
with older people: the US and Argentina. The US experience
with Medicare is fairly well known; the Argentine experience
less so. Between 1967 and 1984 Medicare expenditures grew at
9% annually in real terms. Only a small proportion of this can
be accounted for by growing affiliation or an increase in average
member’s age.20 Since then, levels of coverage provided by
Medicare have been eroded, and the scheme now incorporates
incentives for members to take out additional insurance with
health maintenance organizations (HMO) or other private
organizations.21 Argentina’s programme was established in 1971,
and was initially successful in extending health and other
social services to insured older people (about two-thirds of the
total). However, by the mid-1990s it had begun to accumulate
substantial deficits, which had reached US$1.5 billion in
1995.22
The experiences of the US and Argentina are not encouraging.
Whether similar programmes are appropriate to the needs of
other countries depends on the broader context of health care
financing and organization. In countries with unitary, universal
social insurance schemes there would seem to be little point
in creating separate programmes. Indeed, such a move might
ghettoize health care for the aged, prevent inter-generational
solidarity and create an institutional logic of cost escalation.
However, in countries where health care programmes are fragmented and non-universal, and where private insurance is
a major component, there may be little alternative. This is
because market mechanisms and private health insurance often
discriminate against the aged when selecting affiliates. For
example, private HMO have become a major component of
Chilean health care financing since 1980, but only 3% of their
patients are aged 60 or more, compared to 12% in public hospitals and clinics.23 Similarly, surveys of newly-formed private
insurance companies in Russia indicate a strong tendency to
discriminate against the aged.24 Access to insurance is particularly limited for those older people with pre-existing conditions.
In most countries with private insurance, attempts to prevent
cream-skimming through regulation have proved to be largely
ineffective. Also, firms may be discouraged from employing
older people because they are unable to find moderately-priced
health cover for them. In these cases, separate programmes for
the aged may at least ensure that they receive a satisfactory
level of resources and attention.
As such, the growing international role of private health
insurance (encouraged by the welfare paradigm shift) is likely
to further marginalize health care for elders, unless demarcated
old age funds à la Medicare are in place. The apparent problems
of such funds, and the lack of alternatives to them should be
considered as an intrinsic cost of shifting away from unitary
publicly funded health systems, and, where possible, these costs
should be passed on to private insurers.
Conclusions
Population ageing creates the need for particular forms of social
policy. In later life, people face greater income uncertainty, as
well as increasing health and care needs. However, the policy
challenges for north and south are distinct. This reflects the
different contexts in which ageing is occurring, including
pre-existing social policy infrastructure, resource levels, and the
impact of HIV/AIDS. While lessons may be exchanged between
countries, global social policy blueprints should be avoided.
International debates about effective interventions have been
hamstrung by simplistic views of the ageing experience, wider
ideological disputes and paradigmatic narrow-mindedness. The
risks of an ageing-related social policy ‘meltdown’ should not be
exaggerated. However, current trends (especially the extension
of private pensions and health insurance) are likely to spur cost
escalation, as well as promote inequality across older populations.
As such, demographic ageing provides further cause to rethink
welfare policy, and to reinstate universal public provision as the
lynchpin of social policy in both north and south.
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