1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Projecting OECD Health and Long-Term Care Expenditures

What Are the Main Drivers?

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 of 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 labour participation, reducing informal care, and wage inflation are taken into account. Using this integrated 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.

English

Keywords: projection methods, ageing populations, public health expenditures, demographic and non-demographic effects, longevity, long-term care expenditures
JEL: J11: Labor and Demographic Economics / Demographic Economics / Demographic Trends, Macroeconomic Effects, and Forecasts; J14: Labor and Demographic Economics / Demographic Economics / Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination; H51: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Health; I12: Health, Education, and Welfare / Health / Health Behavior
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