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The Sustainability of European Health Care Systems: Beyond Income and Ageing

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Author Info

  • Fabio Pammolli

    ()
    (Corresponding author, IMT Lucca Institute for Advanced Studies, Lucca, Italy, and Fondazione CERM, Roma, Italy)

  • Massimo Riccaboni

    ()

  • Laura Magazzini

    ()

Abstract

During the last thirty years health care expenditure (HCE) has been growing much more rapidly than GDP in all OECD countries posing increasing concern on the long-term sustainability of current trends. Against this background, we look at the determinants of HCE in European countries, explicitly taking into account the role of income, the effect of ageing population, life habits, technological progress, as well as institutional and budgetary variables. Our results show that the current trend of increasing HCE is rooted in a set of highly differentiated factors. Ageing population is usually regarded as a key driver of HCE in Europe. However, increased life expectancy and decreased fertility rate only tells part of the story. Increased income levels also lead to higher HCE, and the magnitude of the estimated elasticity poses serious concerns about sustainability of current trends. Besides, our results show the deep influence of technological uptake and diffusion, as well as the institutional framework and budget constraints as important factors in explaining HCE growth dynamics. We further control for health habits of the population by looking at the consumption of sugar and of fruits and vegetables. Our results reinforce the need for a political debate at the European level aimed at assuring long-term sustainability and prosperity. The key challenge for Governments is to design pluralistic systems of health care delivery and financing, where a well-balanced mix of public and private financing would put at work market forces to promote investment and innovation, without imposing unsustainable burdens on public budgets or denying care to the disadvantaged population.

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Bibliographic Info

Paper provided by University of Verona, Department of Economics in its series Working Papers with number 52.

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Length: 28
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:ver:wpaper:52

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Keywords: health care expenditure; sustainability; ageing population; income elasticity; welfare;

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References

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Cited by:
  1. Renuga Nagarajan & Aurora A.C. Teixeira & Sandra T. Silva, 2013. "The impact of population ageing on economic growth: an in-depth bibliometric analysis," FEP Working Papers 505, Universidade do Porto, Faculdade de Economia do Porto.
  2. Fabio Pammolli & Nicola Carmine Salerno, 2011. "Le differenze regionali nella governance della spesa sanitaria - SaniRegio-2011," Working Papers 02-2011, Competitività Regole Mecati (CERM).
  3. Allen, Nicola & Pichler, Franz & Wang, Tina & Patel, Sundip & Salek, Sam, 2013. "Development of archetypes for non-ranking classification and comparison of European National Health Technology Assessment systems," Health Policy, Elsevier, vol. 113(3), pages 305-312.
  4. Pammolli, Fabio & Salerno, Nicola, 2011. "Le differenze regionali nella governance della spesa sanitaria. La sanità alla sfide del federalismo: il modello SaniRegio di CeRM
    [Regional differences in the governance of health care expenditur
    ," MPRA Paper 36934, University Library of Munich, Germany.
  5. José Castillo-Manzano & Mercedes Castro-Nuño & Xavier Fageda, 2014. "Can health public expenditure reduce the tragic consequences of road traffic accidents? The EU-27 experience," The European Journal of Health Economics, Springer, vol. 15(6), pages 645-652, July.

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