IDEAS home Printed from https://ideas.repec.org/a/hpe/journl/y2009v1881p55-72.html
   My bibliography  Save this article

Who’s going broke? Comparing growth in Public healthcare expenditure in Ten OECD Countries

Author

Listed:
  • Christian Hagist

    (Freiburg University)

  • Laurence J. Kotlikoff

    (Boston University)

Abstract

Government healthcare expenditures have been growing much more rapidly than GDP in OECD countries. How much of this growth is due to demographic change versus increases in benefit levels (expenditures per person at a given age)? This paper answers this question for ten OECD countries –Australia, Austria, Canada, Germany, Japan, Norway, Spain, Sweden, the UK, and the U.S. using data from 1970-2002. Growth in benefit levels explains 89 of overall healthcare spending growth in the ten countries over the period, with Norway, Spain, and the U.S. recording the highest annual benefit growth rates. As we show, allowing government healthcare benefit levels to grow at historic rates is fraught with danger given the impending retirement of the baby boom generation.

Suggested Citation

  • Christian Hagist & Laurence J. Kotlikoff, 2009. "Who’s going broke? Comparing growth in Public healthcare expenditure in Ten OECD Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 188(1), pages 55-72, March.
    • Handle: RePEc:hpe:journl:y:2009:v:188:1:p:55-72
    as

    Download full text from publisher

    File URL: https://www.ief.es/comun/Descarga.cshtml?ruta=~/docs/destacados/publicaciones/revistas/hpe/188_Art3.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Florian Buchner & Jürgen Wasem, 2006. "“Steeping” of Health Expenditure Profiles," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(4), pages 581-599, October.
    2. Peter Zweifel, 2003. "Medical Innovation: A Challenge to Society and Insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 28(2), pages 194-202, April.
    3. C. David Naylor, 1992. "The Canadian health care system: A model for America to emulate?," Health Economics, John Wiley & Sons, Ltd., vol. 1(1), pages 19-37, April.
    4. Sally C. Stearns & Edward C. Norton, 2004. "Time to include time to death? The future of health care expenditure predictions," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 315-327, April.
    5. Breyer, Friedrich & Felder, Stefan, 2006. "Life expectancy and health care expenditures: A new calculation for Germany using the costs of dying," Health Policy, Elsevier, vol. 75(2), pages 178-186, January.
    6. Breyer Friedrich & Ulrich Volker, 2000. "Gesundheitsausgaben, Alter und medizinischer Fortschritt: Eine Regressionsanalyse / Ageing, Medical Progress and Health Care Expenditures: A Regression Analysis," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(1), pages 1-17, February.
    7. Peter Zweifel & Stefan Felder & Andreas Werblow, 2004. "Population Ageing and Health Care Expenditure: New Evidence on the “Red Herring”," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(4), pages 652-666, October.
    8. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    9. Tim Miller, 2001. "Increasing longevity and medicare expenditures," Demography, Springer;Population Association of America (PAA), vol. 38(2), pages 215-226, May.
    10. Jennifer Roberts, 1999. "Sensitivity of elasticity estimates for OECD health care spending: analysis of a dynamic heterogeneous data field," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 459-472, August.
    11. Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sheng-Ti Hung & Kevin X.D. Huang & Hui He, 2013. "Substituting Leisure for Health Expenditure: A General Equilibrium-Based Empirical Investigation," 2013 Meeting Papers 1310, Society for Economic Dynamics.
    2. Y. Natalia Alfonso & Guiru Ding & David Bishai, 2016. "Income Elasticity of Vaccines Spending versus General Healthcare Spending," Health Economics, John Wiley & Sons, Ltd., vol. 25(7), pages 860-872, July.
    3. Huixin Bi & Wenyi Shen & Shu‐Chun S. Yang, 2022. "Fiscal implications of interest rate normalization in the United States," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 868-904, May.
    4. Hui He & Kevin X.D. Huang & Lei Ning, 2021. "Why Do Americans Spend So Much More On Health Care Than Europeans?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1363-1399, November.
    5. Oliver Fritz & Peter Mayerhofer & Reinhard Haller & Gerhard Streicher & Florian Bachner & Herwig Ostermann, 2013. "Die regionalwirtschaftlichen Effekte der österreichischen Krankenanstalten," WIFO Studies, WIFO, number 46672.
    6. Bettin, Giulia & Sacchi, Agnese, 2020. "Health spending in Italy: The impact of immigrants," European Journal of Political Economy, Elsevier, vol. 65(C).
    7. Lago-Peñas, Santiago & Cantarero-Prieto, David & Blázquez-Fernández, Carla, 2013. "On the relationship between GDP and health care expenditure: A new look," Economic Modelling, Elsevier, vol. 32(C), pages 124-129.
    8. Sergey Sinelnikov-Murylev & Eugene Goryunov & Laurence Kotlikoff, 2015. "Theoretical foundations of fiscal gap as a long-term fiscal sustainability indicator and its estimates for Russia," Research Paper Series, Gaidar Institute for Economic Policy, issue 168P, pages 1-58.
    9. Rossana Merola & Douglas Sutherland, 2013. "Fiscal Consolidation and the Implications of Social Spending for Long-Term Fiscal Sustainability," Review of Economics and Institutions, Università di Perugia, vol. 4(3).
    10. Seth G. Benzell & Laurence J. Kotlikoff & Guillermo LaGarda & Victor Yifan Ye, 2017. "Simulating Business Cash Flow Taxation," NBER Working Papers 23675, National Bureau of Economic Research, Inc.
    11. Hui He & Kevin x.d. Huang, 2013. "Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis," Vanderbilt University Department of Economics Working Papers 13-00005, Vanderbilt University Department of Economics.
    12. Kazakova, Maria & Trunin, Pavel, 2015. "Long-Term Prognosis of Basic Demographic and Macroeconomic Indicators in Russia," Published Papers 2308, Russian Presidential Academy of National Economy and Public Administration.
    13. Oksanen, Heikki, 2014. "Public finance sustainability gap and raising the retirement age, abstract and full summary," Research Reports 177, VATT Institute for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laurence J. Kotlikoff, 2005. "Who’s Going Broke? Comparing Growth in Healthcare Costs in Ten OECD Countries," Working Papers id:286, eSocialSciences.
    2. Christian Hagist & Laurence Kotlikoff, 2005. "Who's Going Broke? Comparing Growth in Healthcare Costs in Ten OECD Countries," NBER Working Papers 11833, National Bureau of Economic Research, Inc.
    3. Friedrich Breyer & Normann Lorenz, 2021. "The “red herring” after 20 years: ageing and health care expenditures," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(5), pages 661-667, July.
    4. Ried, Walter, 2007. "On the relationship between aging, edical progress and age-specific health care expenditures," Wirtschaftswissenschaftliche Diskussionspapiere 08/2007, University of Greifswald, Faculty of Law and Economics.
    5. Fredrik Gregersen, 2014. "The impact of ageing on health care expenditures: a study of steepening," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(9), pages 979-989, December.
    6. Melberg, Hans Olav & Sørensen, Jan, 2013. "How does end of life costs and increases in life expectancy affect projections of future hospital spending?," HERO Online Working Paper Series 2013:9, University of Oslo, Health Economics Research Programme.
    7. Breyer, Friedrich & Felder, Stefan, 2006. "Life expectancy and health care expenditures: A new calculation for Germany using the costs of dying," Health Policy, Elsevier, vol. 75(2), pages 178-186, January.
    8. Baoping Shang & Dana Goldman, 2008. "Does age or life expectancy better predict health care expenditures?," Health Economics, John Wiley & Sons, Ltd., vol. 17(4), pages 487-501, April.
    9. Breyer Friedrich, 2015. "Demographischer Wandel und Gesundheitsausgaben: Theorie, Empirie und Politikimplikationen," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(3), pages 215-230, October.
    10. Ried, Walter, 2006. "Gesundheitsausgaben für Überlebende und Verstorbene im demographischen Wandel: der Einfluss des medizinischen Fortschritts," Wirtschaftswissenschaftliche Diskussionspapiere 10/2006, University of Greifswald, Faculty of Law and Economics.
    11. Colombier, Carsten & Weber, Werner, 2009. "Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis," MPRA Paper 26747, University Library of Munich, Germany, revised Nov 2009.
    12. Fabio Pammolli & Francesco Porcelli & Francesco Vidoli & Monica Auteri & Guido Borà, 2017. "La spesa sanitaria delle Regioni in Italia - Saniregio2017," Working Papers CERM 01-2017, Competitività, Regole, Mercati (CERM).
    13. Friedrich Breyer & Normann Lorenz & Thomas Niebel, 2015. "Health care expenditures and longevity: is there a Eubie Blake effect?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(1), pages 95-112, January.
    14. Stefan Felder, 2006. "Lebenserwartung, medizinischer Fortschritt und Gesundheitsausgaben: Theorie und Empirie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(s1), pages 49-73, May.
    15. Ried Walter, 2007. "Medizinisch-technischer Fortschritt und altersspezifische Gesundheitsausgaben / Medical Progress and Age-specific Expenditure on Health Care," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(5-6), pages 636-659, October.
    16. Polder, Johan J. & Barendregt, Jan J. & van Oers, Hans, 2006. "Health care costs in the last year of life--The Dutch experience," Social Science & Medicine, Elsevier, vol. 63(7), pages 1720-1731, October.
    17. de Meijer, Claudine & O’Donnell, Owen & Koopmanschap, Marc & van Doorslaer, Eddy, 2013. "Health expenditure growth: Looking beyond the average through decomposition of the full distribution," Journal of Health Economics, Elsevier, vol. 32(1), pages 88-105.
    18. Wubulihasimu, Parida & Gheorghe, Maria & Slobbe, Lany & Polder, Johan & van Baal, Pieter, 2015. "Trends in Dutch hospital spending by age and disease 1994–2010," Health Policy, Elsevier, vol. 119(3), pages 316-323.
    19. repec:jns:jbstat:v:227:y:2007:i:5-6:p:578-602 is not listed on IDEAS
    20. Atella, Vincenzo & Conti, Valentina, 2014. "The effect of age and time to death on primary care costs: The Italian experience," Social Science & Medicine, Elsevier, vol. 114(C), pages 10-17.
    21. Felipa de Mello-Sampayo & Sofia de Sousa-Vale, 2014. "Financing Health Care Expenditure in the OECD Countries: Evidence from a Heterogeneous, Cross-Sectional Dependent Panel," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(2), pages 207-225, March.

    More about this item

    Keywords

    Healthcare expenditure growth; long-term fiscal imbalance;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hpe:journl:y:2009:v:188:1:p:55-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Miguel Gómez de Antonio (email available below). General contact details of provider: https://edirc.repec.org/data/iefgves.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.