A PROJECTION METHOD FOR PUBLIC HEALTH AND LONG-TERM CARE by Christine de la Maisonneuve & Joaquim Oliveira Martins

By Christine de la Maisonneuve & Joaquim Oliveira Martins

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Additional resources for A PROJECTION METHOD FOR PUBLIC HEALTH AND LONG-TERM CARE EXPENDITURES ECONOMICS DEPARTMENT WORKING PAPERS No. 1048

Sample text

While a more moderate evolution of spending than in these projections cannot be excluded (for instance if cost-saving technologies were to spread out, or if more aggressive cost-containment policies were to be implemented), these are also clear upside risks on spending. For instance, higher health spending could arise due to an extension of the pre-death period of ill health as longevity increases or because of higher than expected costs induced by technical progress. Regarding LTC, higher spending could arise from increased dependency due to obesity trends or dementia.

The data come from the OECD R&D database. Baumol effect 77. The “cost-disease” Baumol effect is proxied by the productivity growth in total economy. The productivity data come from the OECD Economic Outlook No. , (2012). It is calculated as real GDP per worker in 2005 constant PPP USD. Participation rate 78. Participation rates are those underlying GDP projections and come from the OECD Economic Outlook No. , (2012). , 2003). The cohort approach assumes that the observed participation behaviour of individuals belonging to the most recent cohorts, such as the lower exit rates of current old-age workers relative to previous cohorts, or the higher entry rates of current young women relative to previous cohorts, will continue to apply to future cohorts as well.

Indeed, as the LTC cost is independent of age, the pure age effect has only a moderate impact on spending. Moreover, this effect is mitigated by the ‘healthy ageing’ assumption. Detailed results for all scenarios are provided in Appendix 5. 2. 8 1. Unweighted average. 1 The cost-pressure scenario 55. 1 % of GDP. However, some countries, like Chile, Estonia, Korea, Mexico and Turkey, will experience higher increases (equal to or above 2 percentage points). These countries are starting from a very low level of 32 ECO/WKP(2013)40 LTC expenditure and are in the process of catching up to higher levels.

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