Modelling the Health System in an Ageing Australia, Using A Dynamic Microsimulation Model

Health of the ageing population has the potential to place considerable pressure on future government spending. In the Australian context, this concern has been expressed in several government reports over the last decade. In response to such fiscal concerns, a dynamic microsimulation model, APPSIM, has been developed at NATSEM. This type of model allows health to be considered in the wider socio-economic perspective including factors such as education, labour force status and income. Thus, the health module is able to move beyond solely considering the impacts of an ageing population, but also incorporating changing socio-economic patterns within society. There is wide acknowledgement of the impacts of socio-economic factors on health and consequently, health service usage and expenditure. These up-stream factors which have potential for prevention with appropriate policy intervention are considered in the development of the APPSIM health module. This paper describes the health module that was developed to allow consideration of health risk behaviours, as well as general health status within a changing population and the resultant impacts on health service usage and expenditure. The health module is complex in its modelling of interactions between health risk factors, health status and health service usage. All health variables (smoking status, at-risk alcohol consumption, overweight or obese, inadequate physical activity, general health status, private health insurance) used were imputed onto the 2001 basefile. Transition equations of these variables were estimated to allow projection over time. Health service usage was allocated based on three sectors: medical, pharmaceutical and hospital. The expenditure on health services was applied as a cost per service received by the individual. Results from the model looking at changing educational status of the population (as presented in Australian education policy) will be presented.