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Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis

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  • Colombier, Carsten
  • Weber, Werner

Abstract

This paper contributes to the debate about the impact of population ageing on health care expenditure. Some health economists claim that the commonly presumed impact of population ageing is a "red herring". Based on empirical studies these authors conclude that proximity to death and not age per se matters. In projecting health care expenditure for Switzerland the present study provides evidence that proximity to death is of marginal importance. These projections suggest that population ageing is still the most important age-related cost-driver. Moreover, morbidity outweighs mortality as a factor of health-care expenditure. But most vital are non-demographic drivers such as medical progress. Thus, from the point of view of cost-benefit analysis one should even ignore costs of dying when projecting health care expenditure. Moreover, regressions might overestimate proximity to death due to systematic biases. Finally, ever-increasing health-care expenditure can be slowed down by appropriate policy measures.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26747.

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Date of creation: Nov 2009
Date of revision: Nov 2009
Handle: RePEc:pra:mprapa:26747

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Keywords: health-care expenditure; population ageing; public health-care budget; proximity to death; morbidity;

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References

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  1. Sally C. Stearns & Edward C. Norton, 2004. "Time to include time to death? The future of health care expenditure predictions," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 315-327.
  2. Breyer, Friedrich & Felder, Stefan, 2006. "Life expectancy and health care expenditures: A new calculation for Germany using the costs of dying," Health Policy, Elsevier, Elsevier, vol. 75(2), pages 178-186, January.
  3. Robert E Hall & Charles I Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(1), pages 39-72, 02.
  4. William C. Hsiao, 2000. "What Should Macroeconomists Know About Health Care Policy: A Primer," IMF Working Papers 00/136, International Monetary Fund.
  5. Dreger, C. & Reimers, H.E., 2005. "Health Care Expenditures in OECD Countries: A Panel Unit Root and Cointegration Analysis," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 2(2), pages 5-20.
  6. Peter S. Heller, 2007. "What Should Macroeconomists Know About Health Care Policy?," IMF Working Papers 07/13, International Monetary Fund.
  7. Getzen, Thomas E., 2000. "Health care is an individual necessity and a national luxury: applying multilevel decision models to the analysis of health care expenditures," Journal of Health Economics, Elsevier, Elsevier, vol. 19(2), pages 259-270, March.
  8. Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496.
  9. Christian Salas & James P. Raftery, 2001. "Econometric issues in testing the age neutrality of health care expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 669-671.
  10. 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.
  11. Peter Zweifel & Stefan Felder & Andreas Werblow, 2004. "Population Ageing and Health Care Expenditure: New Evidence on the “Red Herring”," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 29(4), pages 652-666, October.
  12. W. M. T. Westerhout, 2006. "Does Ageing Call for a Reform of the Health Care Sector?," CESifo Economic Studies, CESifo, CESifo, vol. 52(1), pages 1-31, March.
  13. Oecd, 2006. "Projecting OECD Health and Long-Term Care Expenditures: What Are the Main Drivers?," OECD Economics Department Working Papers 477, OECD Publishing.
  14. Jochen Hartwig, 2006. "What Drives Health Care Expenditure? Baumol’s Model of ‘Unbalanced Growth’ Revisited," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 06-133, KOF Swiss Economic Institute, ETH Zurich.
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Cited by:
  1. Gregersen, Fredrik Alexander & Godager, Geir, 2013. "Hospital expenditures and the red herring hypothesis: Evidence from a complete national registry," HERO On line Working Paper Series, Oslo University, Health Economics Research Programme 2013:3, Oslo University, Health Economics Research Programme.
  2. Vincenzo Atella & Valentina Conti, 2013. "The effect of age and time to death on health care expenditures: the Italian experience," CEIS Research Paper, Tor Vergata University, CEIS 267, Tor Vergata University, CEIS, revised 12 Nov 2013.
  3. Melberg, Hans Olav & Sørensen, Jan, 2013. "How does end of life costs and increases in life expectancy affect projections of future hospital spending?," HERO On line Working Paper Series, Oslo University, Health Economics Research Programme 2013:9, Oslo University, Health Economics Research Programme.

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