Demographic Research Monographs A Series of the Max Planck Institute for Demographic Research, Rostock, Germany Editor-in-chief James W. Vaupel Max Planck Institute for Demographic Research, Rostock, Germany For furthervolumes: http://www.springer.com/series/5521 . Tommy Bengtsson Editor Population Ageing - A Threat to the Welfare State? The Case of Sweden Editor Prof.Dr.TommyBengtsson LundUniversity SchoolofEconomicsandManagement CentreforEconomicDemography Scheeleva¨gen15B 22363Lund Sweden [email protected] ISSN1613-5520 ISBN978-3-642-12611-6 e-ISBN978-3-642-12612-3 DOI10.1007/978-3-642-12612-3 SpringerHeidelbergDordrechtLondonNewYork LibraryofCongressControlNumber:2010931436 #Springer-VerlagBerlinHeidelberg2010 Thisworkissubjecttocopyright.Allrightsarereserved,whetherthewholeorpartofthematerialis concerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation,broadcasting, reproductiononmicrofilmorinanyotherway,andstorageindatabanks.Duplicationofthispublication orpartsthereofispermittedonlyundertheprovisionsoftheGermanCopyrightLawofSeptember9, 1965,initscurrentversion,andpermissionforusemustalwaysbeobtainedfromSpringer.Violations areliabletoprosecutionundertheGermanCopyrightLaw. Theuseofgeneraldescriptivenames,registerednames,trademarks,etc.inthispublicationdoesnotimply, evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevantprotective lawsandregulationsandthereforefreeforgeneraluse. Coverillustration:Thefrontcoverphoto–toprighthandcorner–includesaphotographbyHarald Wenzel-Orf(www.wenzel-orf.de)andhasbeenreproducedwithhispermission Coverdesign:WMXDesignGmbH,Heidelberg,Germany Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Contents 1 Introduction ................................................................ 1 TommyBengtsson References ..................................................6 2 TheAgeingPopulation ..................................................... 7 TommyBengtssonandKirkScott 2.1 Introduction..............................................7 2.2 FundamentalsofPopulationAgeing............................8 2.3 ConsequencesofanAgeingPopulation ........................12 2.4 CanWeIncreaseFertility?..................................16 2.5 IsImmigrationtheAnswer?.................................16 2.6 OtherWaystoSolvetheProblem?............................19 2.7 Summary...............................................20 References .................................................21 3 InThisWorldNothingIsCertainbutDeathandTaxes: FinancingtheElderly ..................................................... 23 A˚saHansson 3.1 Introduction.............................................23 3.2 Background.............................................24 3.3 AreIncreasedTaxestheSolution?............................28 3.3.1 IncreasingTaxRates:ANon-solution.....................29 3.3.2 IncreasingtheTaxBase:APartialSolution.................36 3.4 DiscussionandConclusions.................................42 References .................................................44 4 AStablePensionSystem:TheEighthWonder ......................... 47 AgnetaKruse 4.1 Introduction.............................................47 4.2 TheSwedishPensionHistory................................48 v vi Contents 4.3 AgeingandPensions ......................................50 4.4 PensionsinSweden:A4-tierSystem..........................51 4.5 FinancialStabilityintheSwedishPensionSystem................54 4.6 PoliticalSustainability.....................................55 4.6.1 FairnessasanEstimateofSustainability...................57 4.6.2 AFairStartingPoint?.................................61 4.6.3 WhenContributionsDeviatefromBenefits, i.e.DeviationsfromtheDCFeature ......................61 4.6.4 Indexing...........................................62 4.7 ConcludingComments.....................................63 References .................................................64 5 WaysofFundingandOrganisingElderlyCareinSweden ............ 65 PerGunnarEdebalk 5.1 Introduction.............................................65 5.2 TheEstablishmentofOldPeople’sHomes......................67 5.3 TheDevelopmentofHomeHelpServices ......................70 5.4 TimesofReappraisalAround1990 ...........................71 5.5 ElderlyCareofTodayandFutureChallenges ...................72 5.6 FinancingofElderlyCare ..................................75 5.7 Conclusion..............................................78 References .................................................79 6 FinancingHealthcare:AGordianKnotWaitingtoBeCut ........... 81 Bjo¨rnLindgrenandCarlHampusLyttkens 6.1 Introduction.............................................82 6.2 TheSwedishHealthcareSystem .............................83 6.3 SimulatingtheDevelopmentofInpatientCare2000–2040..........86 6.3.1 SomeCharacteristicsoftheSimulationModel ..............88 6.3.2 Base-CaseScenario...................................89 6.3.3 ImprovedHealthProgressionwithandWithout DecreasedRiskofDeath...............................90 6.3.4 IncomesofPeopleinOldAge...........................92 6.4 NotaNon-issue..........................................93 6.5 Non-solutionOne:TechnologicalDevelopment..................94 6.6 Non-solutionTwo:InstitutionalChange........................97 6.7 Non-solutionThree:ExplicitPrioritySetting (orDoWeBelieveintheQALYandNothingbuttheQALY?)..... 100 6.8 TowardsaNon-non-solution(orSimulatingtoHaveanAnswer).... 101 References ................................................ 103 7 TowardsaNewSwedishModel? ........................................ 109 AndreasBergh 7.1 Introduction............................................ 109 Contents vii 7.2 TheSwedishModelSoFar ................................ 110 7.3 TheDemographicChallenges .............................. 113 7.4 ConcludingDiscussion.................................... 117 References ................................................ 118 Index ........................................................................... 121 . Contributors Tommy Bengtsson is Professor of Economic History and Demography at Lund University. He is also Director of the Centre for Economic Demography at the same university since 2006. Bengtsson has in recent years been co-author and co-editor of several books released at internationally distinguished publishers (MIT Press, OUP, and Springer), and one of which received a prize from the American Sociological Association as Outstanding Book on Asia 2005. He has alsohadseveralarticlespublishedininternationalandwell-knownjournalsapply- ing peer-review selection, and is co-editor for a special publication series at MIT Press.Hisinternationalpublications include Population,EconomyandWelfarein Sweden (Springer-Verlag 1994), Population and Economy (Oxford University Press2000,2nded.2003),LifeUnderPressure(MITPress2004),LivingStandards in the Past (Oxford University Press 2005), and Kinship and Demographic BehaviourinthePast(Springer2008). Andreas Bergh received a Ph.D. in Economics 2003 from Lund University in Sweden and was visiting scholar at Harvard in 2004 at the Centre for Basic Research in the Social Sciences. His research concerns the welfare state as well as institutional economics, and recent publications include European Economic Review, European Sociological Review, Political Studies, and Social Science Quarterly. He has also published a book titled Institutional Competition (Edward Elgar) and is currently leading a research project on reform process in mature welfarestates.HeiscurrentlyaffiliatedwithboththeRatioinstituteinStockholm andLundUniversity. PerGunnarEdebalkisPh.D.inEconomicHistoryandProfessorinSocialWork atLundUniversity.Duringtheyears,hehasbeenheadingseveralresearchprojects, the latest ones on Contractual Benefits in the Swedish Labour Market, on Quality competition and Consumer Choice in Home-help Services, and on Elderly Care andtheLocalAuthorities.Hispublishedworks,150intotal,includeArbetslo¨shets- fo¨rsa¨kringsdebatten. En studie i svensk socialpolitik 1892–1934 (Lund 1975), ix