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Health Expenditure Growth: Looking beyond the Average through Decomposition of the Full Distribution

Author

Listed:
  • Claudine de Meijer

    (Erasmus University Rotterdam)

  • Marc Koopmanschap

    (Erasmus University Rotterdam)

  • Owen O'Donnell

    (Erasmus University Rotterdam)

  • Eddy van Doorslaer

    (Erasmus University Rotterdam)

Abstract

This discussion paper resulted in an article in the Journal of Health Economics (2013). Volume 32, pages 88-105. Explanations of growth in health expenditures have restricted attention to the mean. We explain change throughout the distribution of expenditures, providing insight into how growth and its explanation differ along the distribution. We analyse Dutch data on actual health expenditures linked to hospital discharge and mortality registers. Full distribution decomposition delivers findings that would be overlooked by examination of changes in the mean alone. The growth in expenditures on hospital care is strongest at the middle of the distribution and is driven mainly by changes in the distributions of determinants. Pharmaceutical expenditures increase most at the top of the distribution and are mainly attributable to structural changes, including technological progress, making treatment of the highest cost cases even more expensive. Changes in hospital practice styles make the largest contribution of all determinants to increased spending not only on hospital care but also on pharmaceuticals, suggesting important spill over effects.

Suggested Citation

  • Claudine de Meijer & Marc Koopmanschap & Owen O'Donnell & Eddy van Doorslaer, 2012. "Health Expenditure Growth: Looking beyond the Average through Decomposition of the Full Distribution," Tinbergen Institute Discussion Papers 12-051/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20120051
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    6. Norton, E.C., 2016. "Health and Long-Term Care," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 951-989, Elsevier.
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    8. Kolodziej, Ingo W.K. & García-Gómez, Pilar, 2017. "The causal effects of retirement on mental health: Looking beyond the mean effects," Ruhr Economic Papers 668, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Anurag Sharma & Fabrice Etilé & Kompal Sinha, 2016. "The Effect of Introducing a Minimum Price on the Distribution of Alcohol Purchase: A Counterfactual Analysis," Health Economics, John Wiley & Sons, Ltd., vol. 25(9), pages 1182-1200, September.
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    11. Beata Gavurova & Samer Khouri & Viliam Kovac & Michaela Ferkova, 2020. "Exploration of Influence of Socioeconomic Determinants on Mortality in the European Union," IJERPH, MDPI, vol. 17(13), pages 1-21, June.
    12. Sungchul Park & Anirban Basu, 2018. "Alternative evaluation metrics for risk adjustment methods," Health Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 984-1010, June.
    13. Kokot, Johanna, 2017. "Does a spouse's health shock influence the partner's risk attitudes?," Ruhr Economic Papers 707, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Nigel Rice & María José Aragón, 2021. "Publicly funded hospital care: expenditure growth and its determinants," Working Papers 177cherp, Centre for Health Economics, University of York.
    15. Andrew M. Jones & James Lomas & Nigel Rice, 2015. "Healthcare Cost Regressions: Going Beyond the Mean to Estimate the Full Distribution," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1192-1212, September.
    16. Lars Børty & Rasmus F. Brøndum & Heidi S. Christensen & Charles Vesteghem & Marianne Severinsen & Søren P. Johnsen & Lars H. Ehlers & Ursula Falkmer & Laurids Ø. Poulsen & Martin Bøgsted, 2023. "Trends and drivers of pharmaceutical expenditures from systemic anti-cancer therapy," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 24(6), pages 853-865, August.
    17. Dimitrova, V.; & Sameen, H.;, 2022. "Static regulation and technological change: Prescribing cost-effective treatments under financial constraints in the English NHS," Health, Econometrics and Data Group (HEDG) Working Papers 22/15, HEDG, c/o Department of Economics, University of York.
    18. José Villaverde & Adolfo Maza & María Hierro, 2014. "Health care expenditure disparities in the European Union and underlying factors: a distribution dynamics approach," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 251-268, September.
    19. Mauro Laudicella & Paolo Li Donni & Kim Rose Olsen & Dorte Gyrd‐Hansen, 2022. "Age, morbidity, or something else? A residual approach using microdata to measure the impact of technological progress on health care expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1184-1201, June.
    20. Jonas Krämer & Jonas Schreyögg, 2019. "Demand-side determinants of rising hospital admissions in Germany: the role of ageing," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(5), pages 715-728, July.
    21. Nigel Rice & Maria Jose Aragon, 2018. "The determinants of health care expenditure growth," Working Papers 156cherp, Centre for Health Economics, University of York.
    22. Anne Mason & Idaira Rodriguez Santana & María José Aragón & Nigel Rice & Martin Chalkley & Raphael Wittenberg & Jose-Luis Fernandez, 2019. "Drivers of health care expenditure: Final report," Working Papers 169cherp, Centre for Health Economics, University of York.

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    Keywords

    Health care expenditure; decomposition; aging; pharmaceuticals; the Netherlands;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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