A Projection Method for Public Health and Long-Term Care Expenditures

Abstract

This paper proposes a new set of public health and long-term care expenditure projections until 2060, seven years after a first set of projections was published by the OECD. It disentangles health from long-term care expenditure, as well as the demographic from the non-demographic drivers, and refines the previous methodology, in particular by extending the country coverage. Regarding health care, non-demographic drivers are identified, with an attempt to better understand the residual expenditure growth by determining which share can be explained by the evolution of health prices and technology effects. Concerning LTC, an estimation of the determinants of the number of dependants (people needing help in their daily life activities) is provided. A cost-containment and a cost-pressure scenario are provided, together with sensitivity analysis. On average across OECD countries, total health and long-term care expenditure is projected to increase by 3.3 and 7.7 percentage points of GDP between 2010 and 2060 in the cost-containment and the cost-pressure scenarios respectively. For the BRIICS over the same period, it is projected to increase by 2.8 and 7.3 percentage points of GDP in the cost-containment and the cost-pressure scenarios respectively.