Brief comments on ‘scenarios for health expenditure’ Adam Oliver London School of Economics

Objective To project estimates of health expenditure for: –EU15 –EU11 p.5: “…it needs to be noted that [the projections] cannot completely model the specific institutional arrangements and policies which exist at the national level. A certain level of caution must be exercised when interpreting the long-run projections and the degree of uncertainty increases the further into the future the projections go.”

Is health care a luxury good? If income elasticity > 1 = luxury good If 0 = necessary good For EU15, the estimated elasticity has decreased since the early 1980s –Cost containment? Is it plausible that health care is now less of a luxury?

More on luxury… p.18: EU15 has income elasticity < 1 But EU11 > 1 Can we really conclude that health care is more of a luxury in the EU11? Could it be that previous unmet needs are starting to be met? Could it be that that the EU15 has moved more to ‘care’ rather than ‘cure’, which might be cheaper?

Can we really get at luxury? Parkin, McGuire, Yule (1987): Some expenditure increases may be classified as ‘luxuries’ (e.g. multiple opinions); others may focus on necessary care Do other ‘needs’ take priority over health care? Different functional forms (semi-log; exponential) can determine whether a good is a luxury or a necessity Allowing for a range of uncertainty (e.g. 95%CI) can alter conclusions Income elasticities may vary over income groups –So, aggregate data may give a distorted picture Utility functions may not be the same across countries

The influence of aging p.15: For EU15 additional gains in life expectancy are spent in bad health –Expansion of morbidity hypothesis p.16: Some evidence is presented that suggests that much health care is spent on people who are soon to die –Nearness of death argument

Technology p.16: For the EU15, it is suggested that the +ve sign on the number of acute beds is indicative that technology has increased health care costs. Why? p.18: For the EU11, it is suggested that the implementation of technology could have done more harm than good because it has increased expenditures. What about outcomes?

The impact of politics p.32: “Health care spending is to a large extent determined by the policy decisions of national governments…” e.g. in the Britain in the late 1990s, the government decided to increase expenditure for political reasons. –Can this be modelled, and/or predicted? –Also, tax versus social insurance?