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Health expenditures in Latin America and the Caribbean.

This paper presents the results of a study commissioned by the Latin American and Caribbean Technical Department of the World Bank to document and analyze health expenditures in Latin America and the Caribbean. In 1990, the countries of this region spent US$ 69 billion on health, with an average per capita health expenditure of US$ 162. On average, the countries spent 6.2% of their GDP on health, with the expenditures divided about equally between the public and private sectors. In both the public and private sectors, per capita health expenditures were positively and significantly correlated with per capita income. However, this relationship holds only for the public sector, when health expenditures are measured as a proportion of GDP. While several poorer countries were dependent on external assistance, with increasing income, the countries relied more on public expenditures to finance health care. Based on the limited time series data, it is evident that there was a considerable variation among countries regarding the proportion spent on capital investments, primary health care, and drugs, but not on salaries. Looking ahead, with increasing economic development, the proportion of GDP spent on health, along with public health expenditure as a proportion of total health expenditure, is likely to increase rapidly, while aid dependency is likely to decline.

Caribbean Region↗

The impact of changes in private health expenditure on New Zealand households.

The proportion of New Zealand's total health expenditure financed by the public sector has fallen from 87% in 1983/84 to 77% in 1997/98 in real per capita terms. In the paper, we firstly describe changes in private health expenditure in New Zealand and compare these changes with trends in private and public health expenditure in a number of OECD countries. Secondly, we find that in New Zealand, there have been increases in both out-of-pocket payments and membership of private health insurance funds over the period from 1983/84 to 1997/98. We analyze the relationship between out-of-pocket expenditure, insurance expenditure, and household income across income deciles and across time. We find that out-of-pocket payments are regressive but the regressivity did decline in 1993/94 in response to a government initiative to improve the targeting of government subsidies towards lower income households.

Australia↗

Domestic health expenditure in Hong Kong: 1989/90 to 2001/02.

OBJECTIVE: To estimate the total domestic health expenditure in Hong Kong between fiscal years 1989/90 and 2001/02, with breakdown by financing source, provider, and function over time. METHODS: The standard health accounting methods as per the Organisation for Economic Co-operation and Development System of Health Accounts guidelines of 2000 were adopted. RESULTS: Total domestic health expenditure was $68,620 million in the fiscal year 2001/02. In real terms, expenditure grew at an average rate of 7% while gross domestic product increased by 4% during the same period. This indicates a growing share of health spending relative to gross domestic product, from 3.8% in 1989/90 to 5.5% in 2001/02. This upward trend was largely driven by increased public spending that rose 208% in real terms over the period, compared with 76% for private spending. Out-of-pocket payments by households accounted for about 70% of private spending while employers and insurance accounted for 28%. Private insurance plays an increasingly important role in financing private spending whereas household expenditure has shown a corresponding decrease during the period. Expenditure incurred at providers of ambulatory services and hospitals accounted for more than 70% of total health expenditure during the observed period. Hospitals' share of total spending increased by 18%, reaching 45% of total expenditure in 2001/02, whilst the share of providers of ambulatory services reduced to 30% in 2001/02. The two largest functional components of total health expenditure were ambulatory care (35-41%) and in-patient curative care (20-27%). Public spending generally financed in-patient curative care and ambulatory services; private spending was concentrated on ambulatory services and medical goods outside the patient care setting. CONCLUSION: These data provide important information for the public, policymakers, and researchers to assess the performance of the health care system longitudinally, and to evaluate health expenditure-related policies.

Ambulatory Care↗

Time to death and health expenditure: an improved model for the impact of demographic change on health care costs.

BACKGROUND: Obtaining well-founded estimates of the effect of demographic change on future health expenditures is a pressing issue in all developed countries. Thus far, expenditure projections have examined the effect of age on health care costs, but fail to account for the influence of remaining life expectancy on costs. OBJECTIVE: This paper seeks to create a more accurate projection model that considers the concentration of costs towards the end of life, and to compare this model with the more traditional approach that holds age- and sex-specific per capita expenditures constant. METHODS: We used a longitudinal hospital dataset which followed 90 929 patients aged 65 and older from 1970 to death, to create an economic model of hospital costs based on patient age and time remaining to death. We then applied the model to England population projections to predict the effect of demographic changes on hospital expenditures from 2002 to 2026. RESULTS: The decline in age-specific mortality rates over time postpones death to later ages, pushing back death-related costs. Accounting for this in expenditure projections gave a predicted annual growth rate of 0.40%-half of the rate predicted with a traditional method. CONCLUSIONS: Using richer data and more refined methods than have hitherto been employed, this study strongly confirms that the pressure of population increases and ageing demographic structure on hospital expenditures will be partially countered by the postponement of death-related hospital costs to later in life-a finding consistent with emerging epidemiological evidence, and heartening for policy makers and physicians alike.

Adolescent↗

Morbidity pattern, health care utilization and per capita health expenditure in a rural population of Tamil Nadu.

BACKGROUND: Information on the existing morbidity pattern, pattern of health care utilization and the per capita health expenditure is essential to provide need-based health care delivery to a rural population. To obtain this information we performed a study in the K.V. Kuppam Block, North Arcot Ambedkar District, Tamil Nadu. METHODS: We did a cross-sectional study, interviewing respondents from 300 households, from 3 panchayats using a multistage sampling technique. Information relating to 1440 persons was collected. The morbidity data was obtained initially for the week prior to the day of interview, followed by one week to one month and then for two months to one year. RESULTS: During 1990-91, 825 of the 1440 persons (57.3%) did not have any illness. Sex had no bearing on the number of illnesses. Of the 60 children less than 2 years of age, 42 (70%) had one or two illnesses. The period prevalence of infective and parasitic diseases was found to be 21.9% with an average of 3 episodes. Services rendered by private practitioners (registered, non-registered and indigenous) were utilized by 59% of the households and 79% of the households had used allopathic treatment at some time. The average per capita per annum health expenditure was Rs 89.9 (Rs 449 per household). This increased significantly with increase in the household size (p < 0.001) and per capita income (p < 0.01). CONCLUSION: The health-seeking behaviour of this population can be changed if efficient services are rendered through government primary health centres and subcentres. This would allow the existing voluntary agency to withdraw without much change in the per capita health expenditure.

Adolescent↗

State health expenditure accounts: building blocks for state health spending analysis.

The dynamics of financing health care among various levels of government and the private sector are rapidly changing; structural relationships among health care providers are also being altered. These changes are placing increased importance on State-level expenditure estimates that will be instrumental in measuring the differential impact of Federal policies and State-specific initiatives on individual States. This article presents personal health care expenditures (PHCE) for 1980-93. Statistics show wide variation in level and rate of growth of regional spending per person. These statistics also quantify differences in both the percent of health care costs in each State borne by Medicare and Medicaid and in the proportion of each State's economy devoted to the provision of health care.

Aged↗

Health care is an individual necessity and a national luxury: applying multilevel decision models to the analysis of health care expenditures.

Health care is neither "a necessity" or "a luxury"; it is "both" since the income elasticity varies with the level of analysis. With insurance, individual income elasticities are typically near zero, while national health expenditure elasticities are commonly greater than 1.0. The debate over whether health care is or is not a luxury good arises primarily from the failure to specify levels of analysis clearly so as to distinguish variation within groups from variation between groups. Apparently, contradictory empirical results are shown to be consistent with a simple nested multilevel model of health care spending.

Health Care Rationing↗

National health expenditures, 1984.

Growth in health care expenditures slowed to 9.1 percent in 1984, the smallest increase in expenditures in 19 years. Economic forces and emerging structural changes within the health sector played a role in slowing growth. Of the $1,580 per person spent for health care in 1984, 41 percent was financed by public programs; 31 percent by private health insurance; and the remainder by other private sources. Together, Medicare and Medicaid accounted for 27 percent of all health spending.

Delivery of Health Care↗

State health expenditure accounts: purposes, priorities, and procedures.

This article reports on the State Health Expenditure Account (SHEA) project which developed procedures States can use in tracking their health care expenditures. The purposes, priorities, and concepts of SHEAs were designed to meet the needs of State policymakers. The resulting methods are discussed and illustrated using calculations of SHEAs for California. Contrasts with the National Health Expenditure (NHE) framework are provided. Recommendations for cooperation between the Health Care Financing Administration (HCFA) and the States that would facilitate the adoption and estimation of SHEAs are offered. Details of the methods used for the California estimates can be found in the Technical Note of this article.

Accounting↗

An approach to forecasting health expenditures, with application to the U.S. Medicare system.

OBJECTIVE: To quantify uncertainty in forecasts of health expenditures. STUDY DESIGN: Stochastic time series models are estimated for historical variations in fertility, mortality, and health spending per capita in the United States, and used to generate stochastic simulations of the growth of Medicare expenditures. Individual health spending is modeled to depend on the number of years until death. DATA SOURCES/STUDY SETTING: A simple accounting model is developed for forecasting health expenditures, using the U.S. Medicare system as an example. PRINCIPAL FINDINGS: Medicare expenditures are projected to rise from 2.2 percent of GDP (gross domestic product) to about 8 percent of GDP by 2075. This increase is due in equal measure to increasing health spending per beneficiary and to population aging. The traditional projection method constructs high, medium, and low scenarios to assess uncertainty, an approach that has many problems. Using stochastic forecasting, we find a 95 percent probability that Medicare spending in 2075 will fall between 4 percent and 18 percent of GDP, indicating a wide band of uncertainty. Although there is substantial uncertainty about future mortality decline, it contributed little to uncertainty about future Medicare spending, since lower mortality both raises the number of elderly, tending to raise spending, and is associated with improved health of the elderly, tending to reduce spending. Uncertainty about fertility, by contrast, leads to great uncertainty about the future size of the labor force, and therefore adds importantly to uncertainty about the health-share of GDP. In the shorter term, the major source of uncertainty is health spending per capita. CONCLUSIONS: History is a valuable guide for quantifying our uncertainty about future health expenditures. The probabilistic model we present has several advantages over the high-low scenario approach to forecasting. It indicates great uncertainty about future Medicare expenditures relative to GDP.

Accounting↗

Are the additional health expenditures generated by insurance bad for society?

Conventional economic theory has concluded that the additional health expenditures generated by insurance coverage are bad for society and lead to inefficiently high health care expenditures. To reduce costs, economists have promoted solutions--cost sharing insurance policy and managed care--designed to reduce this additional care. This article discusses a new theory of insurance that suggests that much of these additional health expenditures are actually efficient and good for society. As a result, insurance coverage is much better for society than economists have thought. Also, the policy prescriptions are different. The new theory suggests that cost sharing should be applied sparingly, that policy should focus on reducing high prices in order to reduce health expenditures, and that the uninsured should be insured under some type of national insurance program.

Cost Sharing↗

Mental health expenditure in Australia: time for affirmative action.

In Australia, there is a clear relationship (r=-0.56) between the ratio of health expenditure to burden and the ratio of mortality to disability across illness groups. Those illnesses with high mortality relative to disability (e.g. cancer and cardiovascular) are associated with lower health expenditure, relative to the burden they impose. Conversely, illnesses with low mortality but high disability (e.g. musculoskeletal disorders) demonstrate higher expenditure. The notable exception is mental health, which has low mortality, high disability and very low health expenditure. Indeed, the relationship between the mortality/disability and health expenditure/burden ratios is stronger (r=-0.72) when mental health is excluded. As this disparity cannot be explained by a lack of cost-effective treatments for mental disorders, we propose a process of affirmative action for mental health. Urgent investments in cost-effective modes of care are required and these should prioritise increased access among those subpopulations disadvantaged by other social, economic or geographic factors.

Australia↗

The macro determinants of health expenditure in the United States and Canada: assessing the impact of income, age distribution and time.

This paper examines the determinants of real per capita health expenditures in order to assess the impact of age distribution, income and time using American state-level data for the period 1980-1998 and Canadian province-level data for the period 1975-2000. Ageing population distributions and income explain a relatively small portion of health expenditures when the impact of time effects, which is a partial proxy for technological change, is controlled for. However, the impact of age is of more concern given that cost increases are concentrated in the last few years of life and there may be cohort effects as the "Baby-Boom" generation ages. There is an urgent need to better understand the exact mechanisms driving health expenditure increases given that time accounts for approximately two-thirds of health expenditure increases and that its effect is non-linear.

Age Distribution↗

An income-weighted international average for comparative analysis of health expenditures.

Data from 17 countries across 28 years are used to estimate an international health expenditure function based on real per capita GNP. Actual and expected spending levels are compared for 24 countries. Between 1960 and 1987, it has been rare for health expenditure in any country to be more than +/- 20 per cent from the projected value. The norm is for spending to rise at 1.5 times the growth rate of GDP. Two countries appear to display significant anomalies. Spending in the United Kingdom is consistently 15-25 per cent below normal for all years, and Danish expenditure has declined from 7 to 6 per cent of GDP since 1975.

Australia↗

Understanding the impact of eliminating user fees: utilization and catastrophic health expenditures in Uganda.

There is currently considerable discussion between governments, international agencies, bilateral donors and advocacy groups on whether user fees levied at government health facilities in poor countries should be abolished. It is claimed that this would lead to greater access for the poor and reduce the risks of catastrophic health expenditures if all other factors remained constant, though other factors rarely remain constant in practice. Accordingly, it is important to understand what has actually happened when user fees have been abolished, and why. All fees at first level government health facilities in Uganda were removed in March 2001. This study explores the impact on health service utilization and catastrophic health expenditures using data from National Household Surveys undertaken in 1997, 2000 and 2003. Utilization increased for the non-poor, but at a lower rate than it had in the period immediately before fees were abolished. Utilization among the poor increased much more rapidly after the abolition of fees than beforehand. Unexpectedly, the incidence of catastrophic health expenditure among the poor did not fall. The most likely explanation is that frequent unavailability of drugs at government facilities after 2001 forced patients to purchase from private pharmacies. Informal payments to health workers may also have increased to offset the lost revenue from fees. Countries thinking of removing user charges should first examine what types of activities and inputs at the facility level are funded from the revenue collected by fees, and then develop mechanisms to ensure that these activities can be sustained subsequently.

Adolescent↗

[Catastrophic health expenditures in Mexico: magnitude, distribution and determinants].

OBJECTIVE: To describe the magnitude, distribution, and determinants of catastrophic health expenditures in Mexico. MATERIAL AND METHODS: The information source was the National Performance Assessment Survey and the methodology, the one developed by the World Health Organization for assessing fair financing. Households with catastrophic expenditures were defined as those with health expenditures over 30% of their ability to pay. Multivariate analysis by logistic and linear regression were used to identify the determinants of catastrophic expenditures. RESULTS: A total of 3.8% of the households incurred in catastrophic health expenditures. There were huge differences by state. The uninsured, poor, and rural households showed a higher impoverishment risk. Sixty percent of the catastrophic expenditures were attributable to outpatient care and medication. A 10% increase of insured households could result in a 9.6% decrease in catastrophic expenditures. Disability, adults 60 years of age and older, and pregnancy increased the probability of catastrophic expenditures. CONCLUSIONS: The insurance of older adults, pregnant women, and persons with disabilities could reduce catastrophic health expenditures in Mexico.

Adult↗