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Demographic Uncertainty and Health Care Expenditure in Spain

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  • Namkee Ahn
  • Juan Ramón García
  • José A. Herce

Abstract

Usual projections of health care expenditure combine age-sex profiles of health expenditure and scenarios of population projection. However, it has been shown repeatedly that both age-sex specific health expenditures and the population structures in the future are highly uncertain and most projections turned out wrong. Therefore, the projections based on the traditional approach are often unhelpful in evaluating future health care expenditures. In this project we try to improve upon the existing literature by incorporating uncertainties in population projection and future age-sex specific health expenditure. Combining the stochastic population projection with age-specific health expenditure we obtain probabilistic distributions of health expenditure. The median projection shows that public health expenditure will increase by about 40% during the next 47 years, that is, an average annual increase of 0.74%. There is a 10% chance that the expenditure will increase by more than 66% during the projection period, which corresponds to an annual increase of 1.1%. At the optimistic side the total public health expenditure will grow only by 17% (0.35% annual) with a 10% probability. The main part of the increase in total expenditure is driven by the increase in average per-capita expenditure due to ageing. The average per-capita expenditure increases by 33%, from 980 in 2004 to 1307 euros in 2050. If we assume that real per-capita public health expenditure increases by the same rate as per-capita GDP, the share of the public health expenditure in GDP will increase from 5% today to 6.7% in 2050, solely due to demographic change. One factor that could reduce the expenditure pressure in the future is that with decreasing mortality rate there will be fewer people in their last year of life. This, combined with the fact that a major part of health expenditure is driven by decedents, could reduce future health expenditure. Our estimation suggests that distinguishing hospital costs by survival status could reduce somewhat (by about 8%) total hospital expenditure in 2049

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Paper provided by FEDEA in its series Working Papers with number 2005-07.

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Handle: RePEc:fda:fdaddt:2005-07

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  1. Amalia Morales-Zumaquero & Simon Sosvilla-Rivero, . "Structural Breaks in Volatility: Evidence from the OECD Real Exchange Rates," Working Papers 2004-22, FEDEA.
  2. José A. Herce & Simón Sosvilla Rivero, . "EL NO-MAGREB. Implicaciones económicas para (y más allá de) la región," Working Papers 2005-06, FEDEA.
  3. Ana Carolina Ortega Masagué, . "La Antigüedad en el Empleo y los Efectos del Ciclo Económico en los Salarios. El Caso Argentino," Working Papers 2004-25, FEDEA.
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  6. Simon Sosvilla-Rivero & Pedro Rodriguez, 2010. "Linkages in international stock markets: evidence from a classification procedure," Applied Economics, Taylor & Francis Journals, vol. 42(16), pages 2081-2089.
  7. Conde-Ruiz, José Ignacio & Galasso, Vincenzo & Profeta, Paola, 2005. "The Evolution of Retirement," CEPR Discussion Papers 4863, C.E.P.R. Discussion Papers.
  8. Tito Boeri & Ignacio Conde-Ruiz & Vincenzo Galasso, 2004. "Cross-skill Redistribution and the Tradeoff between Unemployment Benefits and Employment Protection," Working Papers 271, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  9. Carolina Navarro & Luis Ayala & José Labeaga, 2010. "Housing deprivation and health status: evidence from Spain," Empirical Economics, Springer, vol. 38(3), pages 555-582, June.
  10. Santiago Budría & Javier Díaz-Giménez, . "Economic Inequality in Spain: The European Union Household Panel Dataset," Working Papers 2004-24, FEDEA.
  11. Namkee Ahn & Juan Ramón García, . "Job Satisfaction in Europe," Working Papers 2004-16, FEDEA.
  12. Namkee Ahn, . "Economic Consequences of Widowhood in Europe: Cross-country and Gender Differences," Working Papers 2004-27, FEDEA.
  13. Raquel Carrasco & Juan Ramón García & Ana Carolina Ortega, . "The Effect of Immigration on the Employment Opportunities of Native-Born Workers: Some Evidence for Spain," Working Papers 2004-17, FEDEA.
  14. J. Aznar-Márquez & J. R. Ruiz-Tamarit, . "Non-Catastrophic Endogenous Growth and the Environmental Kuznets Curve," Working Papers 2004-15, FEDEA.
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  16. Juan F. Jimeno, . "Demographic change, immigration, and the labour market: A European perspective," Working Papers 2004-18, FEDEA.
  17. Salvador Gil-Pareja & Rafael Llorca-Vivero & José A. Martínez-Serrano & Josep Oliver-Alonso, 2005. "The Border Effect in Spain," The World Economy, Wiley Blackwell, vol. 28(11), pages 1617-1631, November.
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Cited by:
  1. Corinne Mette, . "Wellbeing and dependency among European elderly: The role of social integration," Working Papers 2005-12, FEDEA.
  2. José M. Labeaga & Ester Martínez Ros, . "Persistence and ability in the innovation decisions," Working Papers 2005-16, FEDEA.
  3. Ana Carolina Ortega Masagué, . "La situación laboral de los inmigrantes en España: Un análisis descriptivo," Working Papers 2005-08, FEDEA.
  4. Pedro N. Rodríguez, & Simón Sosvilla-Rivero, 2006. "Understanding and Forecasting Stock Price Changes," Working Papers 2006-03, FEDEA.
  5. Andrés J. Marchante Mera & Bienvenido Ortega Aguaza & José Sánchez Maldonado, 2006. "Las dimensiones del bienestar en las Comunidades Autónomas Españolas. Un análisis de Sigma y Gamma-Convergencia," Working Papers 2006-05, FEDEA.
  6. Namkee Ahn, . "Life Satisfaction among Spanish Workers: Importance of Intangible Job Characteristics," Working Papers 2005-17, FEDEA.
  7. Andrés M. Alonso & Daniel Peña & Julio Rodríguez, 2008. "A methodology for population projections: an application to Spain," Statistics and Econometrics Working Papers ws084512, Universidad Carlos III, Departamento de Estadística y Econometría.
  8. José M. Labeaga & Xisco Oliver & Amedeo Spadaro, . "Measuring Changes in Health Capital," Working Papers 2005-15, FEDEA.

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