Projections of OECD Health and Long-Term Care Public Expenditures
44 Pages Posted: 15 Feb 2012
Date Written: March 30, 2006
This paper proposes a comprehensive framework for projecting public heath and long-term care expenditures. Notably, it considers the impact of demographic and non-demographic effects for both health and long-term care. Compared with other studies, the paper extends the demographic drivers by incorporating death-related costs and the health status of the population. Concerning non-demographic drivers, for health care the projection method accounts for income elasticity and a residual effect of technology and relative prices. For long-term care, the effects of increased labor participation, reducing informal care, and wage inflation are taken into account. Following this approach, public health and long-term care expenditure are projected for all OECD countries for the years 2025 and 2050. Alternative scenarios are simulated, in particular a 'cost-pressure' and 'cost-containment' scenario, together with sensitivity analysis. Depending on the scenarios, the total health and long-term care spending is projected to increase on average across OECD countries in the range of 3.5 to 6 percentage points of GDP for the period 2005-2050.
Keywords: Public health expenditures, long-term care expenditures, ageing populations, longevity, demographic and non-demographic effects, projection methods
JEL Classification: H51, I12, J11, J14
Suggested Citation: Suggested Citation