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WP8: Factors Influencing Health Expenditures and Scenarios for Health Expenditures - EU

WP8: Factors Influencing Health Expenditures and Scenarios for Health Expenditures - EU. Ehsan Khoman and Martin Weale. Hypotheses about Determinants of Health Care Spending.

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WP8: Factors Influencing Health Expenditures and Scenarios for Health Expenditures - EU

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  1. WP8: Factors Influencing Health Expenditures and Scenarios for Health Expenditures - EU Ehsan Khoman and Martin Weale

  2. Hypotheses about Determinants of Health Care Spending • We explore hypotheses about the long-run elasticity of health spending with respect to GDP, that spending is closely related to the age structure of the population and that it is substantially driven by death-related costs. Consider our model: (8) • The coefficient If we assume that health care expenditure is driven by ageing then, given that β1 is spending for the population aged under 65, β2 is spending for the population aged between 65 and 74 and β3 is spending for the population aged 75 and over, then total health spending is given by (9)

  3. Hypotheses about Determinants of Health Care Spending • The effect on the proportion of 65-74 year olds of a change in Π2 is (10) and the effect of the same change given the model of health care expenditure is (11) • So the semi-elasticity with respect to the proportion is given as (12)

  4. Hypotheses about Determinants of Health Care Spending • We can similarly impose the restriction that a proportion of health spending is determined by the number of deaths. If (13) then (14) • Thus if spending per death (or spending in the last year of life) is known the associated semi-elasticity can be imposed.

  5. Hypotheses about Determinants of Health Care Spending

  6. Hypotheses about Determinants of Health Care Spending

  7. Hypotheses about Determinants of Health Care Spending

  8. Hypotheses about Determinants of Health Care Spending

  9. Hypotheses about Determinants of Health Care Spending

  10. Hypotheses about Determinants of Health Care Spending

  11. Results

  12. Results

  13. Conclusions • The aim of this work package is to present projections of health care expenditure in order to assess the impact of ageing populations on future spending levels. • One of the key messages that emerges from this work is that a variety of variables seems to influence health spending, and the influence of factors such as the share of the public sector in the total could easily be omitted from more mechanical calculations. • Thus, the results from this study provide a valuable insight into influences on health spending and also shed some light on the policy structures which governments can adopt to keep health spending in check.

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