The discussion about aging populations and pension costs is partly about how societies share the output of their economies between the working and retiree populations. We will explore this in greater depth in coming chapters. The consumption of health care goods and services, however, is unique in virtually all developed societies and so should be considered on its own for a variety of reasons. Health care is largely financed through separate insurance mechanisms than are used to finance health care consumption. In most countries, these insurance mechanisms are predominantly publicly financed and administered, and generally cover both the elderly and the non-elderly populations. The notable exception is the United States, where health insurance is largely privately financed for the non-poor, working-age people and their dependents, and is financed on a mixed public-private basis for the elderly population.

In the context of the current discussion, health care includes the goods and services delivered by health practitioners as acute care or long-term care. Acute care includes ambulatory care delivered by health providers outside of hospitals, care provided to patients who are hospitalized, pharmaceuticals, and so forth. Beyond acute care, long-term care is either institutional care or home services provided to the disabled and others unable to care for themselves. The intersection of aging populations and existing health financing arrangements will create financing challenges for all developed countries in the coming decades for a couple reasons.