Solidarity and the distribution of Health Expenditures

Johan Polder

Tilec-Tranzo Annual ConferenceTilburg, January 26th 2012

Solidarity and the distribution of health expenditures

Solidarity and the distribution of health expenditures2

Succes comes at the price of public health expenditure(billion euros, share in total public spending; source: CPB)

6%

8%

10%

12%

14%

16%

18%

20%

0

50

100

150

200

250

300

350

1973 1978 1983 1988 1993 1998 2003 2008

Public spending

Public health expenditure

Share health in total spending

Solidarity and the distribution of health expenditures3

Competition in Dutch health care

● Harmful for solidarity?– no evidence

● Harmful for tax payer?– Depends on the balance between costs and benefits

Solidarity and the distribution of health expenditures4

Policy debate anno 2012

● Affordability of health care in the (near) future– Given ageing– Given trends in epidemiology and technology– Given economic outlook

● Sustainability of solidarity– Given that babyboom cohort gets older– Given age specific trends in health expenditure

Solidarity and the distribution of health expenditures5

This presentation● Macroeconomic perspective

● The role of health as a determinant of health expenditure (HCE)

● Especially

– The distribution of HCE over the course of life regarding healthy ageing

Solidarity and the distribution of health expenditures6

Solidarity and the distribution of health expenditures7

Tranzo Health Economists’ Group

Solidarity and the distribution of health expenditures8

What about health?

● Absence of illness

● Self perceived health

● Physical and cognitive limitations

Solidarity and the distribution of health expenditures9

Solidarity and the distribution of health expenditures10

Cost of illness 2010

Average HCE per inhabitant (euro)

FemalesMales

Solidarity and the distribution of health expenditures11

Solidarity and the distribution of health expenditures12

“Red herring” in Dutch hospital expenditureAverage expenditure for decedents and survivors

age

Decedents

Survivors

Solidarity and the distribution of health expenditures13

Latent health StatesBased on the Longitudinal Ageing Study Amsterdam (LASA)

Bad healthModerate healthGood health

Solidarity and the distribution of health expenditures14

Life expectancy Health expenditure

Solidarity and the distribution of health expenditures15

The 2 faces of healthy ageing

Life expectancy at age 65 Cumulative HCE at age 65

Lorenzcurve for Acute Care expenditureSingle year versus lifetime

Solidarity and the distribution of health expenditures16

Conclusion

● Despite / (due to?) competition● there’s a lot of solidarity in the Dutch health care system

– (Between higher and lower incomes, not discussed)

– Between healthy and unhealthy people– Between age cohorts

– But also between people and their future selves

Solidarity and the distribution of health expenditures17

Competition and solidarity

● There’s a strong case for a longitudinal approach

– Health Maintenance Organizations– Long term insurance contracts– Health Savings Accounts

● Competition

– fair balance between solidarity and a– Sustainable development of health care expenditure

Solidarity and the distribution of health expenditures18

● “The increasing share of global income spent on healthcare expenditures is not a calamity; it is a sign of the remarkable economic and social progress of our age”

● (The Escape from Hunger and Premature Death, 1700–2100; 2004, p. 107).

Solidarity and the distribution of health expenditures19

Solidarity and the distribution of health expenditures20

Thank you…!