Coping with Asia's US$20 trillion elderly healthcare bill

FILIAL responsibility has always been a proud tradition in Asia, where children take pride in caring for their parents in later life, sharing the financial burden between siblings. However, the region's rapidly ageing population and declining birth rates mean that the financial cost of this tradition will soon be too much to bear as a result of rising elderly healthcare costs.

While many developed countries in Europe have experienced rises in the proportion of elderly people (defined generally as those 65 years and older) in their populations, what stands out in Asia Pacific is the speed of ageing. This compromises the ability of countries to prepare for the increased healthcare demands of an ageing population. For example, in the 15 years from today to 2030, China's elderly population is expected to rise to 18 per cent from 11 per cent, while it took Germany 25 years to do the same (based on World Bank data). In Singapore, the elderly population will rise to 20 per cent from 11 per cent over this period; yet it took France 49 years to do the same.

Based on demographic changes and medical cost trends, we estimate that US$20 trillion will be required to fund elderly healthcare in Asia Pacific between 2015 and 2030. In Singapore, annual public and private expenditure for elderly healthcare is estimated to rise tenfold to US$49 billion by 2030, straining government budgets, infrastructure capacity, and personal savings of the elderly and their families. Across the wider Asia Pacific, annual elderly healthcare expenditure in 2030 will be five times the 2015 total. This rise can be explained through two factors: