Drivers of Health Care Expenditure: Does Baumol's Cost Disease Loom Large?

According to Baumol (1993) health care epitomises Baumol's cost disease. Sectors that suffer from Baumol's cost disease are characterised by slow productivity growth due to a high labour coefficient. As a result, unit costs of these sectors rise inexorably if the respective wages increase with productivity growth of the progressive industries such as manufacturing. Thus, according to Baumol (1993) the secular rise in health-care expenditure has been unavoidable. This present paper demonstrates that health care is contracted by Baumol's cost disease, but only to a minor extent. Consequently, policy-makers have more leeway to curbever-increasing health-care expenditure than is suggested by Baumol (1993) and other authors. In addition, we test the implications of Baumol's cost disease for health care by avoiding the well-known flaws in constructing medical price indices. Therefore, the adjusted Baumol variable derived in this paper is also extremely appropriate to test the validity of Baumol's cost diseases of other service industries such as education or the live performing arts. Additionally, our analysis suggests that health care is rather a necessity than a luxury at the national level, which conflicts with macroeconomic evidence provided in the relevant literature

Explaining regional variations in health care utilization between Swiss cantons using panel econometric models

<p>Abstract</p> <p>Background</p> <p>In spite of a detailed and nation-wide legislation frame, there exist large cantonal disparities in consumed quantities of health care services in Switzerland. In this study, the most important factors of influence causing these regional disparities are determined. The findings can also be productive for discussing the containment of health care consumption in other countries.</p> <p>Methods</p> <p>Based on the literature, relevant factors that cause geographic disparities of quantities and costs in western health care systems are identified. Using a selected set of these factors, individual panel econometric models are calculated to explain the variation of the utilization in each of the six largest health care service groups (general practitioners, specialist doctors, hospital inpatient, hospital outpatient, medication, and nursing homes) in Swiss mandatory health insurance (MHI). The main data source is 'Datenpool santésuisse', a database of Swiss health insurers.</p> <p>Results</p> <p>For all six health care service groups, significant factors influencing the utilization frequency over time and across cantons are found. A greater supply of service providers tends to have strong interrelations with per capita consumption of MHI services. On the demand side, older populations and higher population densities represent the clearest driving factors.</p> <p>Conclusions</p> <p>Strategies to contain consumption and costs in health care should include several elements. In the federalist Swiss system, the structure of regional health care supply seems to generate significant effects. However, the extent of driving factors on the demand side (e.g., social deprivation) or financing instruments (e.g., high deductibles) should also be considered.</p

Does it Really Make a Difference? Health Care Utilization with Two High Deductible Health Care Plans

Deductibles are commonly used to tame increasing health care costs. Numerous studies find that higher deductibles reduce health care utilization. In this paper we compare utilization in Switzerland between two health care plans with deductibles of 1,500 CHF and 2,500 CHF (1CHF = 1$) per calendar year. While there is a minimum deductible level in Switzerland, individuals are free to increase their deductible and thereby reduce their insurance premium. In order to distinguish between selection and moral hazard we use regional variation in premiums as an instrument. Moreover, we take advantage of a policy change in 2005 that introduced the higher deductible for the first time. The results show that selection leads to considerable differences in utilization between the two groups, while we find no behavioral differences across both groups. If anything health care expenditures are higher for male individuals with the higher deductible, while for females there are no differences between the two deductible levels

Growing old at home – A randomized controlled trial to investigate the effectiveness and cost-effectiveness of preventive home visits to reduce nursing home admissions: study protocol [NCT00644826]

<p>Abstract</p> <p>Background</p> <p>Regarding demographic changes in Germany it can be assumed that the number of elderly and the resulting need for long term care is increasing in the near future. It is not only an individual's interest but also of public concern to avoid a nursing home admission. Current evidence indicates that preventive home visits can be an effective way to reduce the admission rate in this way making it possible for elderly people to stay longer at home than without home visits. As the effectiveness and cost-effectiveness of preventive home visits strongly depends on existing services in the social and health system existing international results cannot be merely transferred to Germany. Therefore it is necessary to investigate the effectiveness and cost-effectiveness of such an intervention in Germany by a randomized controlled trial.</p> <p>Methods</p> <p>The trial is designed as a prospective multi-center randomized controlled trial in the cities of Halle and Leipzig. The trial includes an intervention and a control group. The control group receives usual care. The intervention group receives three additional home visits by non-physician health professionals (1) geriatric assessment, (2) consultation, (3) booster session.</p> <p>The nursing home admission rate after 18 months will be defined as the primary outcome. An absolute risk reduction from a 20% in the control-group to a 7% admission rate in the intervention group including an assumed drop out rate of 30% resulted in a required sample size of N = 320 (n = 160 vs. n = 160).</p> <p>Parallel to the clinical outcome measurement the intervention will be evaluated economically. The economic evaluation will be performed from a society perspective.</p> <p>Discussion</p> <p>To the authors' knowledge for the first time a trial will investigate the effectiveness and cost-effectiveness of preventive home visits for people aged 80 and over in Germany using the design of a randomized controlled trial. Thus, the trial will contribute to the existing evidence on preventive home visits especially in Germany.</p

Obesity, smoking, alcohol consumption and years lived with disability: A Sullivan life table approach

Background: To avoid strong declines in the quality of life due to population ageing, and to ensure sustainability of the health care system, reductions in the burden of disability among elderly populations are urgently needed. Life style interventions may help to reduce the years lived with one or more disabilities, but it is not fully understood which life style factor has the largest potential for such reductions. Therefore, the primary aim of this paper is to compare the effect of BMI, smoking and alcohol consumption on life expectancy with disability, using the Sullivan life table method. A secondary aim is to assess potential improvement of the Sullivan method by using information on the association of disability with time to death. Methods. Data from the Dutch Permanent Survey of the Living Situation (POLS) 1997-1999 with mortality follow-up until 2006 (n = 6,446) were used. Using estimated relative mortality risks by risk factor exposure, separate life tables were constructed for groups defined in terms of BMI, smoking status and alcohol consumption. Logistic regression models were fitted to predict the prevalence of ADL and mobility disabilities in relationship to age and risk factor exposure. Using the Sullivan method, predicted age-specific prevalence rates were included in the life table to calculate years lived with disability at age 55. In further analysis we assessed whether adding information on time to death in both the regression models and the life table estimates would lead to substantive changes in the results. Results: Life expectancy at age 55 differed by 1.4 years among groups defined in terms of BMI, 4.0 years by smoking status, and 3.0 years by alcohol consumption. Years lived with disability differed by 2.8 years according to BMI, 0.2 years by smoking and 1.6 by alcohol consumption. Obese persons could expect to live more years with disability (5.9 years) than smokers (3.8 years) and drinkers (3.1 years). Employing information on time to death led to lower estimates of years lived with disability, and to smaller differences in these years according to BMI (2.1 years), alcohol (1.2 years), and smoking (0.1 years). Conclusions: Compared with smoking and drinking alcohol, obesity is most strongly associated with an increased risk of spending many years of life with disability. Although employing information on the relation of disability with time to death improves the precision of Sullivan life table estimates, the relative importance of risk factors remained unchanged

The Ability to Pay for Long-Term Care in the Netherlands: A Life-cycle Perspective

This paper uses synthetic life-cycle paths at the individual level to analyze the distribution of long-term care expenditures in the Netherlands. Using a comprehensive set of administrative data 20,000 synthetic life-cycle paths of household income and long-term care costs are constructed using the nearest neighbor resampling method. We show that the distribution of these costs is less skewed when measured over the life-cycle than on a cross-sectional basis. This may provide an argument for self-insurance by smoothing these costs over the life-cycle. Yet costs are concentrated at older ages, which limits the scope for self-insurance. Furthermore, the paper investigates the relation between long-term care expenditures, household composition, and income over the life-cycle. The expenditures on a lifetime basis from the age of 65 are higher for low income households, and (single) women