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    Global Review of Projecting Health Expenditures for Older Persons in Developing Countries

    Monograph. August 2006. Kobe, Japan: WHO Kobe Centre for Health and Development.

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    Ravi P. Rannan-Eliya, Ruki Wijesinghe
    1 Aug 2006 | 80 pages

    Abstract:

    The emerging feature of the demography of increasing numbers of countries is population ageing � the growth in the share of the population which is elderly. It is universal that the elderly use more health care services than the young, which has led naturally to the expectation that population ageing will result in escalating health care costs. This global study, commissioned by WHO Kobe Centre, reviews the evidence on and the different methods and approaches being used to forecast the impact of demographic change on health system costs at the national level.

    The study finds that the most robust approach is to adopt a framework for thinking about how ageing affects health care spending, in which the future cost of health services is the product of both the utilization of services and the unit cost or price of those services. Studies have found that the impact of ageing in such a framework is not as large as often feared. Moreover, analysis of historical trends in health care spending in the developed countries, which are most advanced in the process of ageing, tend to concur with this. In these countries, ageing has had no detectable or only a modest effect on health care costs. Evidently, ageing does lead to an increase in aggregate utilization of services. However, other factors have a larger impact on future use, including changes in access to services, education and health norms. The unit cost or price of services is not fixed, and may increase or decrease. In addition, there is evidence from developed countries to support the idea that morbidity is being compressed at higher age groups, and that a large proportion of current age-related expenditures will shift into higher ages.

    Several projection methodologies have been used to forecast future health spending. Of these, the most feasible and useful for examining the impact of ageing on health care spending is the actuarial approach, which has been used mostly in developed countries. The literature indicates that few studies of the impact of ageing on future health care costs have been undertaken in developing countries. The few that have been conducted do indicate that such studies are feasible, and also point to similar conclusions to that of studies in developed countries. The most important of these are that ageing is not the main or dominant driver of future health care costs, and that other factors more amenable to policy intervention have more impact. These include decisions over health care financing, policies that shape productivity and medical price inflation, and technology adoption and diffusion policies.

    Projection models are most useful in helping policy-makers understand key issues, and to place population ageing in perspective. Encouraging more work in this field in developing countries should be a high priority. Related to this, a global research priority must be to explore systematically whether compression of morbidity is occurring in developing countries, as the answer to this has substantial policy implications.


     

     

     

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