Aging Population and Medical Costs Put Pressure on Andorra’s Health System

A new report by the International Monetary Fund (IMF) has warned that Andorra’s highly regarded healthcare system could face growing financial pressure in the coming years as costs rise faster than the economy. Prepared by IMF economists Nick Carroll and Aidyn Bibolov in the IMF’s European Department, the study says that Andorra has built one of the world’s most efficient healthcare systems, delivering excellent health outcomes while spending less on public health than many European countries. However, rising medical costs, an aging population, and increasing demand for services are beginning to strain public finances.

The report highlights that Andorra enjoys one of the highest life expectancies in the world, low infant mortality, and broad access to healthcare. The country also managed the COVID-19 pandemic effectively, allowing a faster reopening of the economy compared with many nations. Despite these achievements, government healthcare spending has nearly doubled over the last decade, climbing from 3.5 percent of GDP in 2003 to around 6 percent in 2025.

A Small Country With a Complex Health System

Andorra’s healthcare system is built around several institutions working together. The national health service, SAAS, delivers hospital and healthcare services, while the social security agency, CASS, manages financing through employer and employee contributions. The Ministry of Health oversees policy and public health programs.

The system relies on a mix of public funding, payroll contributions, and private spending. Employers contribute the largest share through social insurance payments, while households also use private insurance and direct payments for some services. Since Andorra is a small country, it depends heavily on agreements with neighboring France and Spain for specialized medical treatments that would be too expensive to provide domestically.

This arrangement has helped Andorra maintain high-quality healthcare without building a large and costly medical infrastructure. However, it also means that millions of euros are spent abroad every year on advanced medical care.

Healthcare Costs Are Rising Quickly

The IMF report shows that healthcare spending has increased sharply between 2014 and 2025. Public health expenditure rose from about €120 million to €236 million during this period. Much of the increase came from hospital salaries, pharmaceuticals, medical devices, and payments to healthcare providers.

Salary costs in the healthcare sector have grown especially fast. The government recently approved higher wages for doctors and nurses to help retain medical staff and remain competitive with neighboring countries. A new wage agreement running through 2030 is expected to add further pressure to spending.

The report also points to major increases during the pandemic in 2020 and again in 2024, when payments to healthcare providers surged significantly. IMF economists say these sharp jumps suggest the government needs stronger monitoring and tighter control over healthcare spending.

At the same time, sickness and disability benefit payments have also risen steadily. The number of people receiving sickness benefits has increased rapidly in recent years, adding further strain to the CASS social security system.

Aging Population Could Deepen the Challenge

According to the IMF, the biggest long-term challenge for Andorra’s healthcare system is demographic aging. The share of people aged over 65 is expected to rise sharply over the next decade, increasing demand for geriatric care, chronic disease treatment, dementia services, and long-term support.

Older people generally require far more healthcare than younger populations, and the report estimates that healthcare costs for senior citizens are nearly four times higher than average. Because of this trend, government healthcare spending could rise to 7.4 percent of GDP by 2035 if current patterns continue.

The IMF says Andorra’s healthcare system will need to adapt by focusing more on preventative healthcare, community care, and healthy aging programs. Expanding primary care services and reducing pressure on hospitals could also improve efficiency.

IMF Calls for Reforms and Better Spending Control

The report stresses that Andorra’s healthcare system is not failing, but warns that reforms are needed to keep it financially sustainable. The IMF recommends setting clearer long-term spending targets, improving efficiency in hospitals, tightening oversight of high-cost treatments, and increasing the use of generic medicines.

The organization also encourages the government to improve monitoring of sickness and disability benefits and consider reforms that help more people return to work where possible. International examples from Sweden, the Netherlands, and Switzerland show that stricter assessments and stronger work incentives can help control spending growth.

Ultimately, the IMF says Andorra faces difficult choices about how to finance rising healthcare costs. Authorities may need to raise social contributions, shift spending away from other sectors, or find productivity gains within the healthcare system itself. The report concludes that gradual and carefully planned reforms will be essential to preserving the quality of Andorra’s healthcare system while protecting the country’s long-term fiscal stability.