Advances in Medical Technology, Population Aging, and Healthcare Expenditure in Japan

Using annual data from 1960 to 2023, we estimate autoregressive distributed lag models to examine the effects of population aging and technological advances in high-cost areas of medical care, such as cancer treatment, on Japan’s public healthcare insurance finances in the long-run. Results show that while population aging and technological advances increase healthcare expenditure and public burden, their effects on insurance premiums and out-of-pocket payments differ. An increase in public burden will further deteriorate the Japanese government’s finances, which are already heavily indebted. Policy implications are presented to ensure the sustainability of the public healthcare insurance system in the future.