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Health care expenditures: the approaching crisis.

Health-related expenditures in the United States have represented an increasing share of the national output since World War II, driven primarily by rapidly advancing frontiers of knowledge and exploding demand generated by expansion of third-part payment mechanisms and governmental tax incentives. In the decades ahead, the demands of an aging population will add a new dimension to the forces already driving total expenditures upward. The demographics of the 1990's and beyond pose a challenge to our society which must be faced today.

Economics, Hospital↗

Time to include time to death? The future of health care expenditure predictions.

Government projections of future health care expenditures--a great concern given the aging baby-boom generation--are based on econometric regressions that control explicitly for age but do not control for end-of-life expenditures. Because expenditures increase dramatically on average at the end of life, predictions of future cost distributions based on regressions that omit time to death as an explanatory variable will be biased upward (or, more explicitly, the coefficients on age will be biased upward) if technology or other social factors continue to prolong life. Although health care expenditure predictions for a current sample will not be biased, predictions for future cohorts with greater longevity will be biased upwards, and the magnitude of the bias will increase as the expected longevity increases. We explore the empirical implications of incorporating time to death in longitudinal models of health expenditures for the purpose of predicting future expenditures. Predictions from a simple model that excludes time to death and uses current life tables are 9% higher than from an expanded model controlling for time to death. The bias increases to 15% when using projected life tables for 2020. The predicted differences between the models are sufficient to justify reassessment of the value of inclusion of time to death in models for predicting health care expenditures.

Aged↗

Adolescent health care expenditures: a descriptive profile.

PURPOSE: To examine health care spending patterns for U.S. adolescents aged 10 to 18 years using nationally representative household survey data. METHODS: We analyzed data from the 1997 Medical Expenditure Panel Survey on total expenditures and out-of-pocket expenditures for health care based on a sample of 4882 adolescents. RESULTS: Compared with that for adults, health care expenditures for adolescents were low, averaging $799 US dollars per adolescent in 1997. Disabled and functionally impaired adolescents had disproportionately high expenditures ($1960 US dollars per capita). Blacks and adolescents living in poor families had disproportionately low expenditures ($358 and $609 US dollars per capita, respectively). Professional services provided by physicians and dentists accounted for more than one-half of all health care spending for adolescents. Only 2% of adolescents were hospitalized in 1997, but they accounted for about one-fifth of all health care expenditures. The share of health expenditures paid out of pocket varied by type of service, ranging from 3% for inpatient hospital care to 51% for dental care. When covered, insurance provided substantial financial protection for families of adolescents: those with public coverage paid 8%, those with private coverage paid 32%, and those without coverage paid 61% of their health care bills out of pocket. The share of health care bills paid out of pocket would be much lower if dental care was excluded. CONCLUSIONS: On the basis of our findings that health care expenditures for adolescents are low and that insurance coverage provides critically needed financial protection, we conclude that further expansions of public and private health insurance coverage for this population would provide significant benefits at modest additional cost. Additional efforts to improve coverage of services that are not now well-covered, such as dental care, would also be valuable.

Adolescent↗

Health care expenditure in Sweden--an international comparison.

This paper analyses health care expenditure in Sweden and compares this with the corresponding expenditure in OECD countries. The definition and measurement problems of health care expenditure are discussed, new figures for the development of health care expenditure are presented and different measures of health care expenditure are provided. We found that health care expenditure has increased by about 20% in constant prices for Sweden between 1980 and 1988, but that health care expenditure as a share of the GDP has dropped during the same period in current prices. Health care expenditure disaggregated on different age groups show for Sweden that in the age group 15-64 years, health care expenditure has not increased in constant prices between 1976 and 1985, but in the oldest age group, health care expenditure has increased considerable during this period. Health care expenditure in Sweden is as high as would be expected, taking into account the degree of economic development and the growth of expenditure during the 80s, and has followed that in comparable OECD countries. However, the relative price is lower, which means that the input of real resources are greater than in other countries.

Australia↗

Effects of the health service and environmental factors on infant mortality: the case of Sri Lanka.

One of the findings of this study is that regional variations in the infant mortality rates of Sri Lanka are large, ranging from 26 per 1000 live births in Jaffna to 91 per 1000 in Nuwara Eliya, a tea estate district. These differences are more strongly associated with regional variations in environmental determinants of mortality than with regional variations in public health expenditure. The most significant environmental factor associated with interregional infant mortality rates was to be the nature of the water supply (r = -0.82, significant at the 99% level). Regional government expenditure on health had only a weak association with infant mortality rates (r = 0.08).

Developing Countries↗

[Factors affecting higher expenditures in health care].

The funds available for the health services at present are not sufficient. When assessing their desirable volume, we must consider a number of factors which influence the needs of financial means. This comprises direct and indirect action, in different spheres and direction and of different intensity. Different factors are not quantifiable to the same extent; some can be expressed only verbally. The resultant of their action which may have the same trend (then the effects add) or have an opposite trend (then the effects cancel out), is then the concrete pressure which in a concrete situation affects the concrete need of financial means. A team of specialists will have to study the identification of factors and assess the assumed forces of their action.

Czechoslovakia↗

Bucking the trend? Health care expenditures in low-income countries 1990-1995.

Health care expenditures in low-income countries are analysed for the years 1990 and 1995 using four key indicators. Key findings include a substantial reduction in public spending per capita across low-income countries between 1990-95; a significant shift towards private expenditures, which appears increasingly to be substituting rather than supplementing public expenditures; a fall in total and public health spending in many countries despite growth in national income, contradicting the relationship found in other studies. Two possible explanations are put forward. First that the patterns found are a direct result of the structural adjustment policies adopted by many low-income countries, which aim to control and often cut public financing, whilst promoting private health expenditures. Secondly, that following the wave of privatization of state industries, many governments are finding problems adapting to their new role as a tax collector, and are thus not benefiting from economic growth to the extent that might be expected.

Data Collection↗

The determinants of health care expenditure: testing pooling restrictions in small samples.

Health care expenditure has increased substantially in all Western industrialized countries in the last decades. The necessity to contain the increase in health care expenditure has motivated the analysis of its determinants to explain differences across countries and health systems. However, recent studies have questioned the use of cross section data arguing that health systems are too different to allow for such comparisons. In this paper we investigate whether this criticism is really justified. We analyze the variations of health care expenditure in OECD countries relative to income, population aging and technological change. Our analysis is based on pooled cross section data and time series. Firstly, formulating error correction models for individual countries we demonstrate that in almost all cases the investigated variables are cointegrated. Secondly, we use a bootstrap framework for inference and examine whether the influence of explanatory variables is unique across countries. Applying recursive estimation procedures we find evidence for cross country homogeneity during the period 1961-1979. In the last two decades health care dynamics become more and more country specific thus indicating divergence of health systems and the growing importance of country-specific effects in the explanation of differences in health care expenditure.

Analysis of Variance↗

Does general practitioner gatekeeping curb health care expenditure?

OBJECTIVES: It is generally assumed that health care systems in which specialist and hospital care is only accessible after referral by a general practitioner (GP) have lower total health care costs. In this study, the following questions were addressed: do health care systems with GPs acting as gatekeepers to specialized care have lower health care expenditure than those with directly accessible specialist care? Does health care expenditure increase more rapidly in countries without a referral system than in those with the GP acting as a gatekeeper? METHODS: Multiple regression analyses on total and ambulatory health care expenditure in 18 OECD countries. RESULTS: Analyses showed only one statistically significant effect (P < 0.05) in countries with gatekeeping GPs: ambulatory care expenditure has increased more slowly than in non-gatekeeping systems. No significant effects of gatekeeping were found on the level of ambulatory care costs, or on the level or growth of total health care expenditure. As in earlier studies, the most important factor influencing aggregate health care costs and their growth is gross national product (GNP), followed by the share of public funding. Relationships that exist at a micro level (such as lower costs with a gatekeeping primary care doctor) did not show up in aggregate data at a macro level. CONCLUSIONS: Gatekeeping systems appear to be better able to contain ambulatory care expenditure. More research is necessary to understand micro level mechanisms and to distinguish the effects of gatekeeping from other structural aspects of health care systems.

Cost Control↗

Physician manpower and health care expenditures in the United States: a thirty-year perspective.

Data gathered on the number of physicians and health care costs in the United States over a 30-year period from 1970 through 1999 were correlated and analyzed using bivariate linear regression. The rise in the number of practicing physicians theoretically predicts 96 percent of the variability in rise of total U.S. health expenditures, 96 percent of the variability in rise of physician service expenditures, 98 percent of the variability in rise of hospital service expenditures, and 86 percent of the variability in rise of prescription pharmaceutical expenditures. If the rate of growth in the number of physicians continues unchanged in the current fee-for-service climate, the model herein predicts that the growth in health care costs will likely continue to rise substantially faster than the rate of growth of the U.S. population and the rate of inflation. The addition of nonphysician providers with the same clinical privileges will likely exacerbate the situation of rapidly escalating medical costs. It is also possible that the excess number of physicians and other health care providers with the same clinical privileges as physicians may decrease the overall quality of health care. Reducing the rise in the number of physicians and nonphysician practitioners may help to decrease overall health care expenditures and improve overall quality of health care in the United States.

Allied Health Personnel↗