Expresión corporal

The wide literature on drivers of healthcare expenditure and demand considers such factors as population size, the age structure of the population, health status, national income, technological change and health system characteristics. The number of people in the population will impact on total demand for healthcare services. However, the structure of the population will also drive the demand for healthcare; demand tends to be higher in the first and later years of life and during maternity years for women (25). Although population ageing is often associated with increased healthcare utilisation, there are competing hypotheses about the relationship of health to ageing, which we examine in detail in Section 2.6.

Background | 17

Early studies of the determinants of health expenditure found national income to be a strong predictor of cross-country differences (26-28), while a recent study finds that over two-thirds of cross-country differences in healthcare expenditure are explained by demographic and economic differences (29). The relationship of health expenditure to national income continues to be explored (30, 31). Early studies tended to report high income elasticities of demand, much greater than unity (32). This implied that healthcare could be considered a luxury good. That is, consumption of healthcare increased at a greater rate than income. As longitudinal data became available and econometric specifications improved, estimates of income elasticity were revised downwards, closer to unity (9). However, the European Commission (25) notes that health expenditure per capita generally grows 1 to 2 per cent faster than GDP across OECD countries. As an explanation, it is suggested that aggregate expenditure decisions by government will not have a linear relationship to GDP because budget allocations may be influenced more by political than economic factors. Increases in health expenditure growth in excess of income growth may also be explained by supply- side effects such as Baumol’s cost disease. This theory posits that in labour intensive services such as healthcare, productivity is lower than in other sectors. However, as wages in low-productivity sectors must keep up with wages in high- productivity sectors, prices for health services will tend to rise faster than other prices (32). There is still a lack of empirical agreement on the impact of Baumol’s cost disease on health expenditure growth (32).

Technology is an important supply-side driver of health expenditure and recent estimates suggest that medical technology explains between 27 and 48 per cent of health expenditure growth since 1960 in the United States (33). Other studies, which have used various proxies for technological change, have also shown the impact of technological change on expenditure growth across countries (34-36). The adoption of new technologies may broaden the range of conditions that are treatable and thus increase demand. While medical innovations may lead to falling unit costs (potentially having a negative effect on expenditures), if the demand response to lower prices is large enough, this may also lead to rising expenditures (30). Furthermore, while new technologies impact short-term costs, they also impact downstream costs, positively and negatively, due to extending life (37).

Health system characteristics may have an influence on health expenditures. Some evidence exists to show that the higher the publicly-financed share of health expenditure, the lower is overall per capita health expenditure in OECD countries (28, 38, 39). Gerdtham et al. (28) showed an increase in the fraction of public financing by 10 per cent was associated with 5 per cent lower health expenditure. Greater control of healthcare providers in publicly-financed systems

has been advanced as an explanation for these findings (30). Other studies have contradicted these findings (40-42) and suggested that higher public healthcare provision may lead to higher healthcare expenditure through a reduced perception of the price of healthcare on the part of consumers and and/or lower incentives for minimising cost in public systems (40). Evidence from the United States shows that while private health insurance growth may explain some of the increase in healthcare expenditure in the past, relative to other factors, it was a not a key driver and its impact may lessen further in the future (33).

Methods of provider remuneration have also been considered potential determinants of healthcare expenditure. Analysis of a sample of 22 OECD countries over the period 1970 to 1991, showed that countries that reimburse physicians by capitation (an annual amount per patient rather than fees for services delivered) tend to have lower health expenditures (43). Similarly, Christiansen et al. (41) showed a negative association between total healthcare expenditure per capita and both payment of GPs by salary and capitation compared to fee-for-service. Moreover, case-based reimbursement of hospitals was associated with lower expenditure per capita. The impact of primary care gate-keeping (where a GP referral is required to see a hospital specialist) on expenditures has also been analysed. Recent evidence has shown that strong primary care is associated with better population health, though it may also result in higher expenditure, but not with increases in expenditure over time (44). Barros found no evidence of a relationship between primary care gate-keeping and health expenditures (45).