Old Age, Gender and Physical Activity "Strength is Health”: George Barker Windship Health Through Sport How to Train the Body for Health and Poise Medicine, Science and Sport The Bicycle and Tricycle as Aids to Health and Recreation Passive Smoking What is Strength? Health Insurance Decisions What Makes Man a Sprinter? What to Fish for in February? Sport and its Economic and Social Importance Use of Weights for Health Does Ageing Drive Health Expenditures Medicare: Policy Issues Indoor Training for Outdoor Sport Starting and Starters Insured versus Not Insured Babylonian Astrology The Wrath of Heaven The Displaced Zodiac and the Beginnings of Astronomy The Duty of the Son of Heaven: Orientation Time Was Once Relative	Does Ageing Drive Health Expenditures? How much will expenditures increase if they are driven only by ageing? How much will health costs increase if they are driven by ageing and by other factors which follow their historical trend? What evidence is there that ageing drives health expenditures and will continue to do so? Is it desirable that age should drive health expenditures and that we should create capacity to accommodate the demands of the ageing population? What other factors will determine future health care costs and what is the relative importance of ageing per sé relative to these other factors? The methods that have been employed to forward project health expenditures were applied to historical data to determine the accuracy of the resulting projection. If ageing had been the only drive factor in the health sector then health expenditures would be now a significantly lower percentage of the GDP. Of the $15.7 billion increase in expenditures (in 1994 constant dollars) only $6.2 billion or 40 percent of the increase, could be attributed to ageing. A minimum of 60 percent of the increase must be attributed to other factors and even this may be a significant overstatement of the importance of ageing if, as discussed below, ageing did not drive expenditures but occurred coincidentally at the same time as expenditures were independently driven by other features. It is possible to argue that the previous results are an unreliable test of the importance of ageing. Expenditures over time may be dominated by the introduction of new technologies which, once they exist, will be used by all age cohorts and that, consequently, the effect of ageing cannot be considered independently of the introduction of new technologies. If this argument were correct it would be expected that cross sectional expenditures would be closely related to the demographic profile of regions and especially so after standardising for other sources of demand for health care. The existence of a cross sectional relationship between age/sex and health expenditures within a country need not imply that there is a relationship between national expenditures over time. For the same reason, the within-country relationship need not imply a cross national correlation between nations. That is, if age and sex do not drive expenditures then no relationship would be expected between national expenditures per capita and the demographic composition of countries. This hypothesis can be tested using publicly available OECD data on health expenditures in member countries. These were used in combination with three measures of the demographic composition of the population, viz, the percent of the population over the ages of 65 and 80 and an index of expected relative expenditures per capita, HP, which was obtained by weighting the proportion of each countries' population in each age/sex cohort by Australian expenditures in these cohorts in 1994-95. Evidence presented in the last section must lead to the conclusion that the simple needs model based upon demographically based need and need based expenditures cannot explain the relative per capita costs of different nations or the relative change in their costs over time. Nevertheless, it is possible to argue that despite the vagaries of history and despite the idiosyncratic factors driving different national health schemes, expenditures are or should be subject to a ratchet effect. Once a pattern of resource use has been established it will be difficult and undesirable to alter that pattern, at least in the short run. That is, as the population ages we should not spend less per age cohort and, consequently, we should minimally increase capacity to facilitate the continuation of existing medical practices. By elimination of other factors, the variables that have been significant on the supply side have been increased unit costs driven by the increase in provider incomes; the increased capacity to deliver services which have been determined by a diverse range of uncoordinated health and educational authorities and new technologies including the more intensive use of traditional therapies. This latter factor is probably the most important `autonomous' variable in the equation and the most difficult for a small country to control. It should not, however, be assumed that the inflationary pressures from technologies of the past will continue. Technology in the USA is an endogenous variable and the US market has been undergoing a significant shift from one which rewards cost creation to one which rewards cost cutting. On the demand side the two significant factors have been the growth in national income and supplier induced demand. The former factor is distinct from the conventional `income effect' of economic theory. As noted above, personal income elasticities are very low. More significantly, it has been government authorities that have been responsible for the major expenditures. While poorly articulated in the literature there is clearly an `institutional income effect' which operates through the growth of budgetary allocations to health authorities that are roughly improportional to income growth and adjusted up or downwards by either a `betterment' or by an `efficiency' factor. In the absence of reliable needs based projections, policy guidelines with respect to the growth of the health sector must be general and qualitative. In principle, it would be desirable to have a needs based model which could project future requirements. From the evidence of small area variation within Australia and variation in procedure use between countries, it is clear that we do not have the basic parameters of such a model and that different medical practitioners are adopting radically different practices. The concomitant of this conclusion is that the theory and practice of `best practice guidelines' and `evidence-based medicine' must be developed as a high priority and then incentives created for their implementation. As provider incomes are determined by the chosen practice pattern this may prove the to be the more challenging political issue. Once achieved, it will be possible to use (in principle) simple needs based models to recommend changes in treatment capacity. In the short-run there appears to be little alternative to a continuation of the ad hoc approach to new technologies and to the changes in health sector capacities implied by these. Even this task is currently hindered by the lack of both epidemiological and economic evaluation which is a prerequisite to sensible decision making in the health sector.