Health Expenditures, Longevity, and Growthby Dormont, Martins, Pelgrin, Suhrcke
Discussion by Axel Börsch-SupanMannheimer Forschungsinstitut „Economics of Aging“ (MEA)
Fondazione RDB, Limone sul Garda, 26. May 2007
Economic Incentives
(2.3.4)
Regu-lation (2.3.4)
Income
(3)
Techno-logical Change
(2.2)
Volume of Health Care
(2.2)
Prices of Health Care
(2.3.3)
Health Care Expenditures
(2.1)
Expenditure Projections
(4)
Health Status,
Longevity
(1)
Value of Life and Health
(2.4)
EconomicGrowth (5.3, 5.4)
Pro-ductivity
(5.2)
(2.4.4: Optimal health care spending)
Stucture of the Epos
Aging (2.2.1)
...an Epos is never straight
Income
(3)
Volume of Health Care
(2.2)Health Care
Expenditures
(2.1)
Health Status,
Longevity
(1)
EconomicGrowth (5.3, 5.4)
Pro-ductivity
(5.2)
1. Health as Investment
Education
Behavior
strengthens investment point of view
Longevity indexation(„real and nominal age“)
Measurement of HALE
Human capital and health stock are complements.
Important for policy!
46,0%
54,8%
70,9% 72,8%
77,8%
44,2%
0
10
20
30
40
50
60
70
80
90
2002 2010 2020 2030 2040 2050
Po
pu
lati
on
[M
io]
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Old
-Ag
e D
epen
den
cy R
atio
[%
]
42,7%47,2%
57,3% 57,5%44,2%
55,5%
0
10
20
30
40
50
60
70
80
90
2002 2010 2020 2030 2040 2050
Po
pu
lati
on
[M
io]
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Old
-Ag
e D
epen
den
cy R
atio
[%
]
„Nominal age“ „Real age“
Germany, using „Official Population Projection Mark 10“
Source: Börsch-Supan and Reil-Held (2004) Do not use demographic dep. ratioUse SYSTEM dependency ratio!
Mannheim Research Institute for the Economics of Aging SPC-ISG 25.Jan.2006
Socio-cultural reporting style
=> Do not rely on self-reported measures!
Mannheim Research Institute for the Economics of Aging SPC-ISG 25.Jan.2006
Socio-Economic Gradient
by education:
by income:
Mannheim Research Institute for the Economics of Aging SPC-ISG 25.Jan.2006
Socio-Economic Gradient: Detailed picture by education
0.5
1
1.5
2
2.5
Heartdisease
Hyper-tension
Highcholesterol
Stroke Diabetes Lungdisease
Arthritis Cancer Ulcer 2+diseases
Odd
s ra
tio
Men Women
• Alzheimer• Obesity
Income
(3)Volume of
Health Care
(2.2)Health Care
Expenditures
(2.1)
Expenditure Projections
(4)
Health Status,
Longevity
(1)
2. OECD Expenditure Projections
• Death-related expenditures
• Babyboom effects
• Compression of morbidity
• Income elasticity
• Why does the latter matter?
Economic Incentives
(2.3.4)
Regu-lation (2.3.4)
Income
(3)
Techno-logical Change
(2.2)
Volume of Health Care
(2.2)
Prices of Health Care
(2.3.3)
Health Care Expenditures
(2.1)
Expenditure Projections
(4)
Health Status,
Longevity
(1)
EconomicGrowth (5.3, 5.4)
Pro-ductivity
(5.2)
3. Causes for Rising Health Care Expenditures
Aging (2.2.1)
SystemEfficiencyGovernance
Contribution to causes:
Weak extrapolation base
Substitution and extension:
Product and process innovation
3. Health expenditures (%GDP) and healthy life expectancy: efficiency???
3. Health expenditures (%GDP) and healthy life expectancy: efficiency???
Source: OECD 2005WHO 2006
73.6 Japan72.8 Switzerland71.8 Sweden71.6 Australia71.3 France71.2 Iceland71.0 Italy71.0 Austria70.9 Spain70.8 Norway70.6 Luxembourg70.4 Greece70.3 New Zealand70.2 Germany70.1 Finland70.1 Denmark69.9 Netherlands69.9 Canada69.7 Belgium69.6 United Kingdom69.0 Ireland67.6 United States66.8 Portugal66.6 Czech Republic64.3 Poland
15.0 United States11.5 Switzerland11.1 Germany10.5 Iceland10.3 Norway10.1 France9.9 Canada9.9 Greece9.8 Netherlands9.6 Belgium9.6 Portugal9.4 Sweden9.3 Australia9.0 Denmark8.4 Italy8.1 New Zealand7.9 Japan7.7 Spain7.7 United Kingdom7.5 Austria7.5 Czech Republic7.4 Finland7.4 Ireland6.9 Luxembourg6.5 Poland
Inpu
t
Output
Mannheim Research Institute for the Economics of Aging SPC-ISG 25.Jan.2006
Health
Demographics
Country specifics
Residual withincountry variation
87%
8.9%1.2%
2.2%
which is not health, age or gender
Variance decomposition
Mannheim Research Institute for the Economics of Aging
Health and Early Retirement
0%
5%
10%
15%
20%
AT BE CH DE DK ES FR GR IT NL SE UK US
DI uptake demo/health generosity
Health and Disability Insurance
Economic Incentives
(2.3.4)
Regu-lation (2.3.4)
Income
(3)
Techno-logical Change
(2.2)
Volume of Health Care
(2.2)
Prices of Health Care
(2.3.3)
Health Care Expenditures
(2.1)
Expenditure Projections
(4)
Health Status,
Longevity
(1)
Value of Life and Health
(2.4)
EconomicGrowth (5.3, 5.4)
Pro-ductivity
(5.2)
(2.4.4: Optimal health care spending)
4. Optimal health care spending
Too what? Too much: supply induced demand Too little: VSL
calculation
Health Expenditures, Longevity, and Growthby Dormont, Martins, Pelgrin, Suhrcke
• Very interesting and inspiring epos• Many issues – so many quibbles…• Keep pushing empirical health economics, push data limits!