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The effects of technology on the age distribution of health spending: a cross-country perspective

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  • Louise Sheiner

Abstract

The conventional method used to project a country's future health care expenditures is to assume that relative health spending by age remains constant. This method has been criticized as being too pessimistic, on the one hand, because of continued improvements in the health status of older people, and as too optimistic, on the other, because of the effects of technological innovations on increasing health spending on the elderly relative to the nonelderly. This paper uses cross-country data to shed light on this question. I find that, contrary to conventional wisdom, the theoretical effects of technology on health spending are to decrease the concentration of health spending on the elderly. Empirically, I find that relative health spending by age has been quite stable over time. I also find that countries with the most technologically intensive health sectors spend relatively less on the oldest old compared to the younger old.

Suggested Citation

  • Louise Sheiner, 2004. "The effects of technology on the age distribution of health spending: a cross-country perspective," Finance and Economics Discussion Series 2004-14, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2004-14
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    References listed on IDEAS

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    1. David M. Cutler & Ellen Meara, 1998. "The Medical Costs of the Young and Old: A Forty-Year Perspective," NBER Chapters, in: Frontiers in the Economics of Aging, pages 215-246, National Bureau of Economic Research, Inc.
    2. Lynelle Moon & Pierre Moïse & Stephane Jacobzone, 2003. "Stroke Care in OECD Countries: A Comparison of Treatment, Costs and Outcomes in 17 Countries," OECD Health Working Papers 5, OECD Publishing.
    3. David M. Cutler & Louise Sheiner, 1998. "Demographics and Medical Care Spending: Standard and Non-Standard Effects," NBER Working Papers 6866, National Bureau of Economic Research, Inc.
    4. David M. Cutler & Ellen Meara, 2001. "The Concentration of Medical Spending: An Update," NBER Chapters, in: Themes in the Economics of Aging, pages 217-240, National Bureau of Economic Research, Inc.
    5. Brockmann, Hilke, 2002. "Why is less money spent on health care for the elderly than for the rest of the population? Health care rationing in German hospitals," Social Science & Medicine, Elsevier, vol. 55(4), pages 593-608, August.
    6. Auerbach,Alan J. & Lee,Ronald D. (ed.), 2001. "Demographic Change and Fiscal Policy," Cambridge Books, Cambridge University Press, number 9780521662444.
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    Cited by:

    1. Louise Sheiner, 2009. "Intergenerational aspects of health care," Finance and Economics Discussion Series 2009-38, Board of Governors of the Federal Reserve System (U.S.).
    2. Xiaotong Niu & Melinda Buntin & Joyce Manchester, 2015. "Changes in Medicare Spending per Beneficiary by Age: Working Paper 2015-08," Working Papers 51027, Congressional Budget Office.
    3. Roel van Elk & Esther Mot & P.H. Franses, 2009. "Modelling health care expenditures; overview of the literature and evidence from a panel time series model," CPB Discussion Paper 121.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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    Keywords

    Medical care; Cost of; Population;
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