Health of the ageing population has the potential to place considerable pressure on future government spending. Further, the impacts of the obesity epidemic have the potential to place additional pressure on government health budgets. In response to such fiscal concerns in Australia, a dynamic microsimulation model, APPSIM, has been developed at the National Centre for Social and Economic Modelling (NATSEM). The health module was developed to allow consideration of health behaviours within the context of an ageing population and the resultant health profile of the population. Also included in the modelling is the associated use of health services and their costs. All health variables used were imputed onto the 2001 basefile derived from the 1 percent unit record file of the 2001 Australian census. Transition equations of these variables were estimated to allow projections over time. In this paper, the model has been used to look at the impacts of obesity on the Australian population health profile and associated health expenditure. In the scenario, removal of obesity from the population leads to a simulated population with a better health profile but showed only marginal changes in relative health expenditure. 1. Introduction It is well known that the Australian population is ageing and that across all age groups there is rising levels of obesity. In 1971, 8 percent of the Australian population was aged 65 years and over: by 2010, this had increased to almost 14 percent [1]. Official projections indicate that by 2050 some 23 percent of the Australian population will be aged 65 years and over [2]. An ageing population places increased pressure on government spending through increased demand for health care, aged care, and pensions. Health care spending has been steadily growing, from $Au 42 billion in 1996-1997 to $Au 103 billion in 2006-2007 [3]. Projections estimate continued rises in health expenditure from 3.7 percent of GDP in 2009/10 to 7.0 percent of GDP in 2046/47 [2]. Beyond the number or proportion of the aged population, the impacts on future health expenditure will be moderated by the health experience of the aged population. Possibilities of morbidity compression [4], expansion [5], dynamic equilibrium [6], or some cyclic effect between compression and expansion of morbidity [7] will impact the possible demand for health services. The relationship between health and longevity may be effected by the severity of disease not being as great due to slower progression of disease [8]. Further, issues such as new technology, medications, and changes
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