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Health expenditure growth: reassessing the threat of ageing

Author

Listed:
  • Brigitte Dormont
  • Michel Grignon

    (Departments of Economics and Gerontology, McMaster University, Ontario, Canada)

  • Hélène Huber

    (EconomiX, Université Paris 10, Nanterre, France)

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.

Suggested Citation

  • Brigitte Dormont & Michel Grignon & Hélène Huber, 2006. "Health expenditure growth: reassessing the threat of ageing," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 947-963.
  • Handle: RePEc:wly:hlthec:v:15:y:2006:i:9:p:947-963
    DOI: 10.1002/hec.1165
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    References listed on IDEAS

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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