health expenditures, longevity, and growth by dormont, martins, pelgrin, suhrcke

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!