ABSTRACT. Background: The effect of population aging on future health services use depends on the relationship between longevity gains and health. Whether further gains in life expectancy will be paired by improvements in health is uncertain. We therefore analyze the effect of population ageing on health services use under different health scenarios. We focus on the possibly diverging trends between different dimensions of health and their effect on health services use. Methods: Using longitudinal data on health and health services use, a latent Markov model has been estimated that includes different dimensions of health. We use this model to perform a simulation study and analyze the health dynamics that drive the effect of population aging. We simulate three health scenarios on the relationship between longevity and health (expansion of morbidity, compression of morbidity, and the dynamic equilibrium scenario). We use the scenarios to predict costs of health services use in the Netherlands between 2010 and 2050. Results: Hospital use is predicted to decline after 2040, whereas long-term care will continue to rise up to 2050. Considerable differences in expenditure growth rates between scenarios with the same life expectancy but different trends in health are found. Compression of morbidity generally leads to the lowest growth. The effect of additional life expectancy gains within the same health scenario is relatively small for hospital care, but considerable for long-term care. Conclusions: By comparing different health scenarios resulting in the same life expectancy, we show that health improvements do contain costs when they decrease morbidity but not mortality. This suggests that investing in healthy aging can contribute to containing health expenditure growth.
