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The cost of population aging: forecasting future hospital expenses in Germany

Author

Listed:
  • Hilke Brockmann

    (Max Planck Institute for Demographic Research, Rostock, Germany)

  • Jutta Gampe

    (Max Planck Institute for Demographic Research, Rostock, Germany)

Abstract

Forecasts are always wrong. Still, they paint potential future scenarios and provide a platform for policy decisions today. This is what gives forecast such a high salience in political debates about the effects of population aging. The paper aims at gauging the effect of population aging on hospital expenses in Germany. We use a probabilistic forecast model comprising a stochastic demographic component that exploits historical mortality trends, a stochastic cost component based on typical hospital costs over the life-course, and a quality measure of medical progress, which builds on past advances in hospital treatment. Three different scenarios are constructing, yielding 3 important results. Firstly, there is an increase in overall hospital expenditure until the German baby boomers will die out (2040 to 2050). Secondly, the increase is comparably moderate because the average individual costs are likely to decline as elderly health improves and since medical progress has an ambiguous influence on hospital expenditures. Finally, the cost increase varies significantly by gender and disease.

Suggested Citation

  • Hilke Brockmann & Jutta Gampe, 2005. "The cost of population aging: forecasting future hospital expenses in Germany," MPIDR Working Papers WP-2005-007, Max Planck Institute for Demographic Research, Rostock, Germany.
  • Handle: RePEc:dem:wpaper:wp-2005-007
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    File URL: http://www.demogr.mpg.de/papers/working/wp-2005-007.pdf
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    More about this item

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Z0 - Other Special Topics - - General

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