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Health expenditure growth: reassessing the threat of ageing

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Author Info
Brigitte Dormont
Michel Grignon (Departments of Economics and Gerontology, McMaster University, Ontario, Canada)
Hélène Huber (EconomiX, Université Paris 10, Nanterre, France)

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Abstract

In this paper we evaluate the respective effects of demographic change, changes in morbidity and changes in practices on growth in health care expenditures. We use microdata, i.e. representative samples of 3441 and 5003 French individuals observed in 1992 and 2000. Our data provide detailed information about morbidity and allow us to observe three components of expenditures: ambulatory care, pharmaceutical and hospital expenditures.

We propose an original microsimulation method to identify the components of the drift observed between 1992 and 2000 in the health expenditure age profile. On the one hand, we find empirical evidence of health improvement at a given age: changes in morbidity induce a downward drift of the profile. On the other hand, the drift due to changes in practices is upward and sizeable. Detailed analysis attributes most of this drift to technological innovation.

After applying our results at the macroeconomic level, we find that the rise in health care expenditures due to ageing is relatively small. The impact of changes in practices is 3.8 times larger. Furthermore, changes in morbidity induce savings which more than offset the increase in spending due to population ageing. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1165
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 15 (2006)
Issue (Month): 9 ()
Pages: 947-963
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Handle: RePEc:wly:hlthec:v:15:y:2006:i:9:p:947-963

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Andreas Werblow & Stefan Felder & Peter Zweifel, 2007. "Population ageing and health care expenditure: a school of 'red herrings'?," Health Economics, John Wiley & Sons, Ltd., vol. 16(10), pages 1109-1126. [Downloadable!]
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