Measuring fiscal sustainability on the municipal level: A German case study

The consequences of ageing populations for federal and state fiscal policies are, due to the research efforts of the last two decades, well known. However, it is rather less well known how the municipal level is affected. Therefore, by using a modification of the sustainability definition formulated by Blanchard, Chouraqui, Hagemann, and Sartor (1990) and the concepts of Auerbachs, Kotlikoffs and Gokhales Generational Accounting (1991) we define a new framework focusing on capital stock, financial management and depreciation of municipal assets. This papers purpose is to deliver a concept which is able to provide sound indicators for long-term budgeting by local authorities. We apply this framework to three German cities with different typologies, Munich, Freiburg and Schwäbisch Hall. --Fiscal sustainability,demographic transition,municipalities

Who's Going Broke? Comparing Growth in Healthcare Costs in Ten OECD Countries

Government healthcare expenditures have been growing much more rapidly than GDP in OECD countries. For example, between 1970 and 2002 these expenditures grew 2.3 times faster than GDP in the U.S., 2.0 times faster than GDP in Germany, and 1.4 times faster than GDP in Japan. How much of government healthcare expenditure growth is due to demographic change and how much is due to increases in benefit levels; i.e., in healthcare expenditures per beneficiary at a given age? This paper answers this question for ten OECD countries -- Australia, Austria, Canada, Germany, Japan, Norway, Spain, Sweden, the UK, and the U.S. Specifically, the paper decomposes the 1970-2002 growth in each countrys healthcare expenditures into growth in benefit levels and changes in demographics. Growth in real benefit levels has been remarkably high and explains the lions share %uF818 89 percent %uF818 of overall healthcare spending growth in the ten countries. Norway, Spain, and the U.S. recorded the highest annual benefit growth rates. Norways rate averaged 5.04 percent per year. Spain and the U.S. were close behind with rates of 4.63 percent and 4.61 percent, respectively. Allowing benefit levels to continue to grow at historic rates is fraught with danger given the impending retirement of the baby boom generation. In Japan, for example, maintaining its 1970-2002 benefit growth rate of 3.57 percent for the next 40 years and letting benefits grow thereafter only with labor productivity entails present value healthcare expenditures close to 12 percent of the present value of GDP. By comparison, Japans government is now spending only 6.7 percent of Japans current output on healthcare. In the U.S., government healthcare spending now totals 6.6 percent of GDP. But if the U.S. lets benefits grow for the next four decades at past rates, it will end up spending almost 18 percent of its future GDP on healthcare. The difference between the Japanese 12 percent and U.S. 18 percent figures is remarkable given that Japan is already much older than the U.S. and will age more rapidly in the coming decades. Although healthcare spending is growing at unsustainable rates in most, if not all, OECD countries, the U.S. appears least able to control its benefit growth due to the nature of its fee-for-service healthcare payment system. Consequently, the U.S. may well be in the worst long-term fiscal shape of any OECD country even though it is now and will remain very young compared to the majority of its fellow OECD members.

Who’s going broke? Comparing growth in Public healthcare expenditure in Ten OECD Countries

Government healthcare expenditures have been growing much more rapidly than GDP in OECD countries. How much of this growth is due to demographic change versus increases in benefit levels (expenditures per person at a given age)? This paper answers this question for ten OECD countries –Australia, Austria, Canada, Germany, Japan, Norway, Spain, Sweden, the UK, and the U.S. using data from 1970-2002. Growth in benefit levels explains 89 of overall healthcare spending growth in the ten countries over the period, with Norway, Spain, and the U.S. recording the highest annual benefit growth rates. As we show, allowing government healthcare benefit levels to grow at historic rates is fraught with danger given the impending retirement of the baby boom generation.Healthcare expenditure growth, long-term fiscal imbalance

Der Rücklagenbedarf der Versorgungsausgaben in Baden-Württemberg: Projektion und Reformoptionen

Im vorliegenden Papier werden die Ruhegehaltsausgaben am Beispiel des Landes Baden-Württemberg bis zum Jahr 2050 projiziert. Wir zeigen, dass sich im günstigsten Fall die Ruhegehaltsausgaben von heute 2,38 Mrd. Euro auf 4,68 Mrd. Euro im Jahr 2030 bzw. 6,12 Mrd. Euro im Jahr 2050 erhöhen werden. Besonders unter dem Gesichtspunkt, dass die deutschen Bundesländer ab dem Jahr 2020 gemäß den Beschlüssen der Föderalismuskommission II keine neue Kredite mehr aufnehmen dürfen, wird der starke Anstieg der Ruhegehaltsausgaben die fiskalische Handlungsfähigkeit der Politik deutlich verringern. Eine Übertragung der Reformen der Gesetzlichen Rentenversicherung kann den Anstieg der Ruhegehaltsausgaben signifikant dämpfen, jedoch reicht dies für eine Stabilisierung der Ausgaben nicht aus. --Projektion,Versorgungsausgaben,Baden-Württemberg

Social health insurance: The major driver of unsustainable fiscal policy?

During the next decades the populations of most developed countries will grow older as a result of the low level of birth rates since the 1970s and/or the continuously increasing life expectancy. We show within a Generational Accounting framework how unsustainable the public finances of France, Germany, Switzerland and the U.S. are, given their demographic developments. Thereby, our focus lies on social health insurance systems which are in addition affected by the medical-technical progress. Due to the cost-increasing effect of the medical-technical progress one can justifiably say that social health insurance schemes are the major drivers behind unsustainable fiscal policies. --

Long-term fiscal effects of public pension reform in Norway: A generational accounting analysis

Generational Accounts (GAs) measure the fiscal sustainability of the public sector. We ask whether the contributions from the Government Pension Fund and remaining oil and gas wealth in the ground, together with the pension reform taking effect in 2011, are sufficiently large to secure generational balance in Norway. Our results show that the pension reform has a substantial effect, and contributes as much to generational balance as the total petroleum wealth. Neither increased economic growth per se nor increased fertility contribute to improve the GAs. The structural characteristics of higher employment and lower transfer payments typical for cyclical upturns, improve the GAs substantially. Optimistic assumptions regarding these structural characteristics do not remove the need for further reforms to obtain fiscal sustainability of the Norwegian public sector. --Generational Accounting,Norway,Fiscal Policy,Intergenerational redistribution

Pension and Intergenerational Balance - a case study of Norway, Poland and Germany using Generational Accounting

In this paper we apply the method of Generational Accounting to analyse whether today’s government policy burdens future generations with a heavier load than current generations. We analyse pay-as-you-go pension systems and their reforms in Norway, Poland and Germany. Our results show that, through these reforms, pension systems in all three countries became more intergenerationally balanced as the implicit debt to be paid by future generations was reduced. However, the burden is shared differently: in Norway current pensioners have to contribute to enhancing the financial sustainability of the pension system while Poland and Germany seem to protect current pensioners at the expense of younger generations

Social Health Insurance - the Major Driver of Unsustainable Fiscal Policy?

During the next decades the populations of most developed countries will grow older as a result of the low level of birth rates since the 1970s and/or the continuously increasing life expectancy. We show within a Generational Accounting framework how unsustainable the public finances of France, Germany, Switzerland and the U.S. are, given their demographic developments. Thereby our focus lies on social health insurance systems that are in addition affected by medical-technical progress. Due to the cost-increasing effect of medical-technical progress one can justifiably say that social health insurance schemes are the major drivers behind unsustainable fiscal policies.

Was bringen Bürgerversicherung und Gesundheitsprämie wirklich?

Prof. Dr. Bernd Raffelhüschen, Stefan Fetzer und Christian Hagist, Universität Freiburg, untersuchen mit Hilfe der Generationenbilanzierung, welche Auswirkungen die aktuellen Vorschläge (nämlich Bürgerversicherung oder Gesundheitsprämien) zur Reform der gesetzlichen Krankenversicherung, auf die "Nachhaltigkeit in der Finanzierung der Sozialen Sicherungssysteme" hat.Gesundheitspolitik, Krankenversicherung, Gesundheitsreform, Gesundheitsfinanzierung, Deutschland, Bürgerversicherung