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The second half of this two-part article examines some potential solutions to offset the rise in health care expenditures that currently afflicts the United States. Among the ideas proposed by the author is an emphasis on changing reimbursement processes. In addition, he argues, eliminating one-half million bureaucratic jobs could reduce health expenditures by billions of dollars.
Regression analysis was used to compare out-of-pocket health expenditures between lower and higher income elderly and non-elderly households. Race and housing tenure were significant determinants for both age groups, but assets, education, and family size were significant only for the non-elderly. Analysis of out-of-pocket health costs indicated greater equity among elderly persons, probably due to Medicare, but income elasticities revealed that health spending is a luxury for lower income elderly households.
In this paper, we review the literature on a number of the potential explanations for the rise in health care expenditures in the United States: the aging population, the costs of dying, technology, physician incomes, administrative costs, prescription drugs, managed care, and the underfunding of public health. Our goal is not to pass definitive judgment on the force(s) driving health care costs, but rather to make the reader a more educated consumer of these widely cited data. We place special emphasis on how health expenditures are measured and the inherent weaknesses in the methodology. We find that frequently it is difficult to accurately estimate how individual forces influence total health care expenditures. Moreover, we conclude that interpreting the causes of the rise in expenditures goes beyond simple observations of trends and depends on how we value various segments and aspects of health and health care.
As part of the background research to the World development report 1993: investing in health, an effort was made to estimate public, private and total expenditures on health for all countries of the world. Estimates could be found for public spending for most countries, but for private expenditure in many fewer countries. Regressions were used to predict the missing values of regional and global estimates. These econometric exercises were also used to relate expenditure to measures of health status. In 1990 the world spent an estimated US$ 1.7 trillion (1.7 x 10(12) on health, or $1.9 trillion (1.9 x 10(12)) in dollars adjusted for higher purchasing power in poorer countries. This amount was about 60% public and 40% private in origin. However, as incomes rise, public health expenditure tends to displace private spending and to account for the increasing share of incomes devoted to health.
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The relationship between health care expenditure and health outcomes is of interest to policy makers in the light of steady increases in health care spending for most industrialised countries. However, establishing causal relationships is complex because, firstly, health care expenditure is only one of many quantitative and qualitative factors that contribute to health outcomes, and, secondly, measurement of health status is an imperfect process. This study reviews key findings and methodological approaches in this field and reports the results of our own empirical study of countries of the European Union. Our analysis examines life expectancy and infant mortality as the 'output' of the health care system, and various life-style, environmental and occupational factors as 'inputs'. Econometric analyses using a fixed effects model are conducted on a panel data set for the former 15 members of the European Union over the period 1980-1995. The findings show that increases in health care expenditure are significantly associated with large improvements in infant mortality but only marginally in relation to life expectancy. The findings are generally consistent with those of several previous studies. Caveats and improvements for future research are presented.
This paper is an evaluative survey of the economic literature on the relationship between technology and/or innovation and health expenditures. Various types of analysis viz. econometric modelling; three residual approaches; the cost-of-illness approach; and the literature on supplier interests are contrasted, and the results presented. The paper concludes with a discussion of the policy and planning implications, and a simple, and conventional, proposal is made that could unambiguously determine this relationship in the case of process innovations.
This article presents data on health care spending for 30 OECD countries from OECD Health Data 2003, the latest edition of OECD's annual data collection on health systems across industrialized countries. OECD data show health care expenditures as a proportion of gross domestic product at an all-time high, due to both increased expenditures and overall economic slow-down. The article discusses similarities and differences across countries in how health care expenditures are funded and how the health care dollar is spent among types of services.
In this paper we evaluate the respective effects of demographic change, changes in morbidity and changes in practices on growth in health care expenditures. We use microdata, i.e. representative samples of 3441 and 5003 French individuals observed in 1992 and 2000. Our data provide detailed information about morbidity and allow us to observe three components of expenditures: ambulatory care, pharmaceutical and hospital expenditures. We propose an original microsimulation method to identify the components of the drift observed between 1992 and 2000 in the health expenditure age profile. On the one hand, we find empirical evidence of health improvement at a given age: changes in morbidity induce a downward drift of the profile. On the other hand, the drift due to changes in practices is upward and sizeable. Detailed analysis attributes most of this drift to technological innovation. After applying our results at the macroeconomic level, we find that the rise in health care expenditures due to ageing is relatively small. The impact of changes in practices is 3.8 times larger. Furthermore, changes in morbidity induce savings which more than offset the increase in spending due to population ageing.
Fieldwork conducted in Kpelle village in north-central Liberia revealed that health-care expenses constitute a major part of domestic spending. The actual transactions for major health-care expenditures are handled by men, typically using income that jointly belongs to the couple in addition to the husband's personal income. Women are likely to spend their personal incomes on minor health expenses for themselves and their children. Women's health expenditure, as well as their income handling arrangements, seem to differ according to the type of conjugal union they are in. Although Kpelle wives have input in most financial decisions, they tend to defer to men on issues which are associated with the Western world, namely Western health care, educational and tax expenditures.
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Explore the source record for details and available documents.
Explore the source record for details and available documents.
Explore the source record for details and available documents.
Explore the source record for details and available documents.
Explore the source record for details and available documents.
Health care expenditures are highly concentrated in the United States, with a small fraction of the population accounting for a large share of total health spending. This concentration has proved remarkably stable over time; however, the degree of concentration has declined over the past decade. Using data from the 1996-2003 Medical Expenditure Panel Survey (MEPS), we explore why. We find that rapid growth in prescription drug spending, which is diffused over a large fraction of the population, versus slower growth in spending for inpatient care largely accounts for the recent change in concentration. We discuss the potential implications for current cost containment and reform efforts.
The United States spent an estimated $287 billion for health care in 1981 (Figure 1), an amount equal to 9.8 percent of the Gross National Product (GNP). Highlights of the figures that underly this estimate include the following: Health care expenditures continued to grow at a rapid rate in 1981, at a time when the economy as a whole exhibited sluggish growth. The 9.8 percent share of the GNP was a dramatic increase from the 8.9 percent share seen just two years earlier. Health care expenditures amounted to $1,225 per person in 1981 (Table 1). Of that amount, $524, or 42.7 percent, came from public funds. Hospital care accounted for 41.2 percent of total health care spending in 1981 (Table 2). These expenditures increased 17.5 percent from 1980, to a level of $118 billion. Spending for the services of physicians increased 16.9 percent to $55 billion--19.1 percent of all health care spending. Public sources provided 42.7 percent of the money spent on health in 1981, including Federal payments of $84 billion and $39 billion in State and local government funds (Table 3). All third parties combined--private health insurers, governments, private charities, and industry--financed 67.9 percent of the $255 billion in personal health care in 1981 (Table 4), covering 89.2 percent of hospital care services, 62.1 percent of physicians' services, and 41.3 percent of the remainder (Table 5). Direct patient payments for health care reached $82 billion in 1981, accounting for 32.1 percent of all personal health care expenses (Table 6). Consumers and their employers paid another $73 billion in premiums to private health insurers, $67 billion of which was returned in the form of benefits. Outlays for health care benefits by the Medicare and Medicaid programs totaled $73 billion, including $42 billion for hospital care. The two programs combined paid for 28.6 percent of all personal health care in the nation (Table 7).